November Ushers in Choppy Oil, Natural Gas Prices

Entering a new month of trading, oil climbed to more than $78 on the New York Mercantile Exchange during choppy trading on Monday as impressive manufacturing data from the world's top consumer ultimately helped push the commodity's price slightly higher than Friday's close. Conversely, the price of natural gas tumbled to less than $5 during November's opening session.

Despite a slight weakening in price last week, the oil market has not lost its upward momentum and remains at its strongest level for 2009. The energy commodity looks to be taking firm root in the $75-$80 trading range, having surpassed the lower end of this range in mid-October.

During Monday's trading, however, crude failed to raise the bar above a high of $82 reached in late October, gaining only $1.13 from last week's ending price to settle at $78.13 on the NYMEX.

"Today was one of those really strange days. Crude tried to rally, fell all the way back and actually went into negative numbers, and here, late in the day, rallied again," commented Darin Newsom, senior analyst with DTN, a market information service in Omaha, Nebraska.

"What's interesting to me is that natural gas was strong last week and so it came down; crude oil was a bit weaker last week and so it went up," the analyst noted. "So, the action that we saw in the markets to close out the month last week seemed to reverse itself today, and I think we're going to have to be ready for these types of choppy markets for quite some time."

Crude Market's Uneven Ebb and Flow

Some analysts point to positive economic news as the catalyst for a late rally in crude prices. Reports surfaced today that the U.S. manufacturing sector grew last month at a faster-than-expected rate. Additionally, pending sales of previously owned homes in the U.S. have accelerated due to government stimulus.

With such volatile trading throughout the day, as is typical at the start of the week, Newsom isn't so sure that today's optimistic view of the economy was the primary factor is oil's final pricetag. 

"There really didn't seem to be an overriding reason for anything that went on today [in the market] other than that Mondays are Mondays, and that means volatility is usually higher with people coming out of the weekend ready to trade," Newsom revealed.

"Rather, it just seemed as if there was a very uneven ebb and flow to the money today, and late in the day it was flowing in rather than out," the analyst observed.

Looking ahead, Newsom added, "So much is going to depend on what investment money decides to do."

Natural Gas Market Slips on Still-Bearish Fundamentals

While natural gas futures have remained above a $5-point mark after the November contract expired last week, the energy commodity lost ground Monday, settling to $4.824 per thousand cubic feet on the NYMEX, or more than 20 cents less than Friday's close.

"Just as we've been talking about for quite some time, the underlying fundamentals of the natural gas market are still bearish, although not as bearish as they used to be," Newsom said.

"I didn't see any news out there of any dramatic change in the natural gas market," he continued. "It just seemed that there was some money coming out of natural gas, possibly going back into other commodities. Will it be long term? Probably not -- it certainly wouldn't surprise me to see natural gas up and crude oil down tomorrow," the analyst concluded.