Prices rise more than $2/barrel on anticipation that demand from US will increase
Strong data on US consumer spending for the month of November, 2007 pushed up crude prices considerably higher today. Crude oil prices rose more than $2/barrel after data showed that US consumer spending in November was strongest in last two years. This gave rise to speculation that demand from world’s largest oil consumer will not be slowing in coming months and that’s why crude rallied. A weak dollar also contributed to the rising crude.
For the day ending Friday, 21 December, 2007, crude-oil futures for light sweet crude for February delivery closed at $93.31/barrel (higher by $2.25/barrel or 2.5%) on the New York Mercantile Exchange. Futures rose as high as $93.84 earlier in the day. Prices are 53% higher than the year before.
The Commerce Department reported today that U.S. nominal consumer spending increased 1.1%, the most in two and a half years. This was against an expected figure of 0.9%.
In the currency market today, the dollar gained on the yen but gave up a bit of ground to other major rivals in thin pre-holiday market conditions. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, edged down 0.1% at 77.70.
Brent crude oil for February settlement today rose $1.58 (1.7%) to $92.46 on the London-based ICE Futures Europe exchange.
Today, January natural gas rose 5.3 cents to $7.190 per million British thermal units. Yesterday, the EIA reported today that U.S. natural gas inventories dropped 121 billion cubic feet to 3,173 billion cubic feet in the week ending 14 December, less than expected figure of 129 billion cubic feet.
Against this backdrop, January reformulated gasoline rose 5.19 cents to $2.3795 a gallon and January heating oil edged up 1.96 cents to $2.6091 a gallon.
As per EIA, global oil markets will likely remain tight through 2008 and monthly average oil prices are expected to near $85 per barrel over the next year. The IEA, an adviser to 27 nations, said global demand in 2008 will rise 2.5% to 87.8 million barrels a day.