Commodity Corner: Oil Rallies on Economic Data
Oil prices surged Tuesday on brighter economic news and the dollar's decline. Light, sweet crude futures gained $2.07 to settle at $99.37 a barrel on the New York Mercantile Exchange (NYMEX).
According to U.S. government reports, retail sales dropped for the first time in 11 months. A decline in car sales, which were affected by the earthquake in Japan, caused retail sales to fall by 0.2 percent. However, ruling out auto sales, purchases rose by 0.3 percent. Additionally, the U.S. Labor Department reported a decrease in food costs.
For the first time in two weeks, the Dow Jones Industrial Average, Nasdaq and the S&P 500 were up by more than 1 percent.
On Tuesday, the greenback declined against the euro and other foreign currencies after Chinese economic reports eased concerns about global demand. As the dollar drops, the dollar-denominated commodity becomes cheaper amongst foreign buyers.
The intraday range for oil was $96.51 to $99.44 a barrel.
Prices for front-month gasoline surged 2.3 percent, settling at $3.065 a gallon Tuesday. The increase came on news of BP’s 457,000 bpd refinery being shut down Monday night and an upset at Shell's 327,000 bpd refinery. Both refineries are located in Texas. The 6.78 cent-gain came after fluctuating between $2.997 and $3.07 Tuesday.
Meanwhile, natural gas for July delivery fell 6.5 cents to settle at $4.581 per thousand cubic feet. Natural gas prices traded between $4.56 and $4.65 Tuesday.