Crude Ends With Rally After Choppy Session
Oil futures closed up more than a dollar on Friday, with a late-day rally capping a choppy session whipsawed by mixed signals from Europe and China.
Light, sweet crude for January delivery ended the day up $1.07, or 1.1%, at $99.41 a barrel on the New York Mercantile Exchange, bouncing back from Thursday's rout when oil prices lost more than 2%. Brent crude on the ICE futures exchange was up $1.15, or 1.1%, at $108.70 a barrel.
Oil futures bounced up and down throughout the day, crossing the zero line several times, but began surging upward in the last half hour of trading with volume in some minutes reaching as high as eight times normal levels. In the absence of any specific news affecting the market, traders said the rally was likely driven by pre-programmed short covering as prices hit lows on technical charts that triggered buy orders.
The market was buffeted throughout the day by mixed messages from China and Europe.
China announced it would launch a $300 billion foreign exchange investment vehicle through two funds, one focused on the U.S. and one focused on Europe. Industrial production figures came in slightly lower than expected, but China's inflation rate also slowed, raising hopes that central bankers there might loosen monetary policy to boost growth. Meanwhile, European leaders announced they had a new agreement to combat sovereign debt woes, but it fell short of he kind of comprehensive solution that markets have been waiting for.
Both pieces of news contained glimmers that might suggest global demand for crude would hold up, but also didn't eliminate the possibility that it would fall.
"Every news item out there is a good news/bad news kind of a story," said Tim Evans, an analyst with Citi Futures Perspective. "The good news is, China may pull together an investment vehicle they're talking about. The bad news is, they've been talking about it for the last two years and nothing's happened. The good news is EU leaders did something. The bad news is, it might not be enough. Just about everything out there is subject to a variety of interpretations."
Front-month January reformulated gasoline blendstock, or RBOB, gained 2.95 cents, or 1.2%, to settle at $2.5961 a gallon. January heating oil lost 1.73 cents, or 0.6%, ending at $2.9125 a gallon.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.