Oil Gains More Than 2% as Dollar Loses Ground
- NYMEX crude up $1.86 to $73.75
- NYMEX natural gas down 11 cents $5.29
- NYMEX gasoline futures up at $1.93
Underpinned by broader financial markets, crude oil futures climbed to $74 on the New York Mercantile Exchange Tuesday as investors continued to buy into riskier asset classes instead of seeking safe haven in the U.S. currency.
Keeping above recent lows during a volatile trading session today, the price of light, sweet crude oil for March delivery added a hefty gain of $1.86 to yesterday's final price tag, settling to $73.75 after scaling down from an intra-day high of $74.15 a barrel.
Additionally, NYMEX gasoline futures stood ground in positive territory, closing higher at $1.93, while heating oil futures also saw an uptick in purchasing with the onset of colder weather conditions across the U.S. Northeast, notably the world's largest market for the energy commodity.
"I think the crude oil market continues to demonstrate its attachment to the broader financial markets," commented Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
Specifically, McGillian underscored rising equities and a weak dollar as the primary impetuses for today's higher price per barrel of oil. According to the analyst, crude oil is an asset class increasingly driven by domestic and international financial movements.
Underscoring this, McGillian said, "There seems to be an attempt coming out of the EU to solve Greece's budgetary problems," which has undermined the dollar's strength against a surging euro and has consequently added support to both the commodities and equities markets.
Rallying on news that the euro zone would lend a hand to cash-strapped Greece, the Dow posted a significant daily percentage advance on the session.
"We're starting to see the equity markets pick up some speed on the idea that if this problem is solved, then some of the economic worries that waylaid the market last week will abate," the analyst explained.
On the domestic front, natural gas extended its fall into negative territory on Tuesday, with spot prices at the Henry Hub for March delivery down an additional 11 cents to $5.29 per thousand cubic feet.
"With the large amount of increased production we've seen brought into the domestic market from unconventional gas sources -- primarily shale gas -- combined with the recession-impacted levels of industrial demand, which accounts for nearly 30% of gas demand here in the U.S., there are ample supplies still weighing on the market," McGillian noted.