Commodity Corner: Oil, NG Benefit from Economic News
An increase in an important gauge of the economy's health helped January crude oil to end the day higher Friday.
Oil settled at $88.02 a barrel after the Conference Board announced that its U.S. Leading Economic Index (LEI) increased to 112.41 in November. Compared to LEI increases from the two preceding months, November's 1.1-percent rise suggests that an economic recovery may be strengthening. The LEI rose by a relatively modest 0.4 percent and 0.6 percent in October and September, respectively.
January crude also received a bump from speculation that leaving U.S. income tax rates unchanged for another two years and reducing payroll taxes for one year will help to spur energy demand. On Friday afternoon, President Barack Obama signed legislation that will extend the tax cuts first signed by President George W. Bush in 2001. Without the extension, tax rates would increase January 1 to levels instituted during the Clinton Presidency.
Also propelling oil Friday was an American Petroleum Institute observation that total U.S. petroleum deliveries were 6.5 percent higher last month compared to the figure for November 2009. API explained that the increase in fuel demand marked the largest year-to-year increase for any month in 2010.
January crude oil traded within a range from $87.01 to $88.52 Friday. Compared to the settlement price for last Monday, oil is down 0.7 percent for the week.
Evidence of a recovering economy also gave natural gas a boost Friday. Natural gas for January delivery gained two cents to end the day at $4.07 per thousand cubic feet after fluctuating from $3.95 to $4.11. For the week, however, natural gas is down 7.9 percent.
The price of a gallon of gasoline also gained two cents Friday, settling at $2.32 and remaining flat for the week. Gasoline peaked at $2.34 and bottomed out at $2.29.