Oil settles below $77 ahead of inventories report, stocks move between losses and gains
By APTuesday, September 14, 2010
Oil ends lower, stocks swing from losses to gains
NEW YORK — Oil settled below $77 a barrel Tuesday as the stock market swung between losses and gains on mixed economic news.
Benchmark crude for October delivery lost 39 cents to settle at $76.80 a barrel on the New York Mercantile Exchange.
Gas pump prices rose to a national average of $2.717 for a gallon of unleaded, according to AAA, Wright Express and Oil Price Information Service. That’s almost a penny higher than Monday and 3.5 cents above a week ago. Much of the rise came in the Midwest, where a pipeline outside Chicago that supplies Canadian crude to Midwest refiners remained shut while a leak is repaired.
The average pump price in Illinois is about $2.94, up more than two cents from Monday. Indiana retail gas prices average around $2.84 a gallon. Michigan and Wisconsin drivers are paying about $2.82.
After a run-up from $72 a barrel at the end of August, crude has again slowed its advance, mainly on concerns about the strength of the global economy. While positive news on China’s economy has tended to push prices up, data from the U.S. and Europe has been a mixed bag, keeping a lid on price increases.
A report from Sucden Financial Research noted, “It seems that there is modest resistance in the $78-per-barrel area for the near term, but crude oil prices remain in the ‘healthy range’ of $73-$77 per barrel.”
On Tuesday the Commerce Department said retail sales rose 0.4 percent last month, the biggest gain since March. Meanwhile the EU’s statistics office, said industrial production in the eurozone was flat in July and a survey of German investor sentiment was much weaker than expected.
Stocks rose and fell through the day. The Dow Jones Industrial Average ended down almost 18 points. The NASDAQ and the S&P 500 were little changed as well.
The head of the Organization of the Petroleum Exporting Countries suggested Tuesday in Vienna that oil production will probably stay unchanged for some time.
Abdalla El-Badri said OPEC was “comfortable” with the current range of oil prices and did not want to “rock the boat” as the world recovers from the global economic downturn.
While some analysts say low energy prices are crucial to an economic recovery, oil may not remain in the “comfortable” range for long.
“The tide will soon be turning in the U.S. oil market,” Goldman Sachs said in a report. “We expect a draw on U.S. inventories to begin in the coming weeks, which will likely serve as a catalyst for higher crude oil prices.”
Goldman sees crude trading at $92 a barrel in three months and $101 per barrel in a year.
The Energy Department’s Energy Information Administration weekly report on crude supplies will be released Wednesday. Data for the week ending Sept. 10 is expected to show drops of 2.25 million barrels in crude oil stocks and of 400,000 barrels in gasoline supplies, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
Natural gas prices could get some support in the days and weeks ahead. Although Hurricane Igor and other Atlantic storms behind it are not currently on track for oil and gas production facilities in the Gulf of Mexico, weather may still play a role.
“Weather forecasts have been revised much warmer in the six-to-10 day period for both the Midwest and the Mid-Atlantic regions of the country and slightly warmer across much of the eastern half of the country in the 11-to-15 day period,” said Addison Armstrong, senior director of market research at Tradition Energy He said that could provide some support for gas prices later this month.
Extending the cooling season could increase demand for natural gas as more power plants that supply electricity use less expensive, cleaner-burning gas.
Natural gas gained 2.8 cents to settle at $3.966 per 1,000 cubic feet on the Nymex.
In other energy trading heating oil rose 0.61 cent to settle at $2.1288 a gallon and gasoline fell 1.16 cents to settle at $1.9690 a gallon.
In London, Brent crude added 13 cents to settle at $79.16 a barrel on the ICE Futures exchange.
Associated Press writers Pablo Gorondi in Hungary, Alex Kennedy in Singapore and Veronika Oleksyn in Vienna contributed to this report.
Tags: Commodity Markets, Energy, New York, North America, Prices, United States