Commodity Corner: Oil Rallies on Euro-Zone Pledge
Trading was light on the holiday that commemorates Christopher Columbus' arrival in the New World, but news from the other side of the Atlantic helped crude oil start the week with a rally.
Light sweet crude oil for November delivery gained nearly three percent Monday, settling at $85.41 a barrel, after the leaders of France and Germany reported progress in developing a comprehensive plan to stabilize the euro-zone's economy. The Brent contract price rose at a similar rate, ending the day at $108.95 a barrel.
Presenting a united front during a Sunday press conference in Berlin, French President Nicolas Sarkozy and German Chancellor Angela Merkel pledged to unveil by month's end a complete plan to recapitalize ailing banks, bolster the euro-zone's bailout fund and provide financial aid to Greece. Although the announcement was short on specifics, it prompted rallies in equity markets and helped the euro to strengthen against the U.S. dollar. Because crude oil is priced in dollars, a weaker greenback tends to be bullish for oil and other commodities.
The WTI traded within a range from $82.75 to $86.09 while the Brent fluctuated from $105.78 to $109.20.
November natural gas also finished the day higher, gaining 1.7 percent to settle at $3.54 per thousand cubic feet. Natural gas peaked at $3.56 and bottomed out just under $3.46.
Reformulated gasoline for November delivery rose by nearly two percent, settling at $2.70 a gallon after fluctuating from $2.65 to $2.72.