Oil Price Rallies on GDP Growth, Nat. Gas' New Contract Above $5
Gaining on positive news concerning U.S. economic growth for the quarter, Wall Street rallied today helping to spur a recovery in crude futures after a surprise build in gasoline inventories took a toll on commodity markets yesterday. Oil prices settled just under $80 a barrel on the New York Mercantile Exchange Thursday, while a new natural gas contract showed prices floating near the $5-point mark.
The price of light, sweet crude for December delivery gained more than $2 on the NYMEX Thursday, ultimately closing at $79.87 per barrel. Today's price reaffirms the $80-level that has recently become a 'comfort zone' for higher oil prices. However, yesterday's correction to nearly $77 underscores the possibility that a continued run-up in the energy commodity's price might lose momentum in the next quarter without the necessary fundamental support.
Adding additional support to a rebound in oil price, the dollar's value lost ground once more against a basket of major international currencies.
Economic Green Shoots
The market's optimism was lifted today as better-than-expected GDP data figures indicated that the U.S. economy grew during the third quarter, fueled by government stimulus to aid new car and home purchases. According to the Commerce Department's data, the U.S. economy grew at a 3.5% pace in the third quarter, suggesting that the economy is in the early stages of a recovery process from the worst recession since the 1930s.
"We're up almost two-and-a-half dollars today, and I think you can tie that directly to the government's strong GDP report," said Gene McGillian, analyst with Tradition Energy in Stamford, Connecticut.
"I think today's action shows that the market still remains pinned by swings in the broader financial markets," the analyst added.
Natural Gas Market Rolls in New Contract
While its November contract expired yesterday, natural gas futures for December delivery closed at $5.066 per thousand cubic feet on the NYMEX Wednesday. Today's price settled slightly below that at $5.062.