Oil maintains price rise to over $91; light volume

NEW YORK (BestGrowthStock) – Oil prices traded above the pivotal $91-a-barrel-level on Tuesday, hovering just below a 26-month high struck the previous session, as weakness in the dollar outweighed poor U.S. consumer confidence data.

U.S. crude found early support as the dollar slipped against a basket of currencies, before giving back some gains following the release of economic data from the world’s top consumer.

American consumer confidence unexpectedly deteriorated in December, hurt by increasing worries about the job market, according to a private report released by the Conference Board. The data weighed on equities markets.

Single-family home prices fell for a fourth straight month in October, pressured by a supply glut, home foreclosures and high unemployment, according to the Standard & Poor’s/Case-Shiller composite index.

U.S. crude for February delivery rose 39 cents to $91.39 a barrel by 12:33 p.m. (1733 GMT), a day after touching $91.88, the highest crude price since October 2008.

In London, ICE Brent crude traded 41 cents higher at $94.26 a barrel.

Copper and gold also found support from the weaker dollar, which tends to bolster commodities denominated in the greenback.

“I think the market is pretty quiet on volume, but, that said, this morning’s price action seems to be more reflective of a positive tone than a negative tone,” said Michael Korn, president of Skokie Energy in Princeton, New Jersey.

“I’m thinking it’s more like day traders are playing it from the long side,” Korn added, explaining the generally firmer tone to the market, along with the corresponding light volumes.

Trading was extremely light, with total crude volumes around 114,000, well below the 30-day average of 600,000. RBOB gasoline traded around 22,000 times and heating oil futures changed hands near 25,000 times. The products volumes were also significantly below their 30-day averages. These levels were also as of 12:33 p.m.

“I think (oil is) being pulled in different directions, with a definite upward bias,” said Phil Flynn, an analyst with PFGBest Research in Chicago.

“On one hand its commodity side wants to rally, but its financial instrument side is being restrained because the stock market is lower (due to U.S. consumer confidence data).”

Oil has rallied by 35 percent from lows struck in May, and is up roughly 15 percent from the end of 2009.

A rally across financial markets took hold in earnest around September, spurred by the U.S. Federal Reserve’s latest round of quantitative easing, a weakened dollar and rising demand.

“Data in recent weeks have been supportive of the stocks and commodity markets globally. The U.S. will avoid a double-dip. The Asian region including Japan looks a little bit better, with its industrial production finally showing an increase,” said David Cohen, director of Asian Economic Forecasting at Action Economics.

“I think a lot of people are expecting prices to turn higher toward $100 a barrel next year.”

The Organization of Arab Petroleum Exporting Countries, some of whose members also belong to OPEC, met in Cairo at the weekend, when leading exporter Saudi Arabia reiterated its preference for a $70-$80 price range. Others said $100 would be fair and the global economy could withstand it.

Oil has also found some support from cold weather across the United States and Europe. A blizzard across the U.S. East Coast this week was viewed as mixed for markets as it bolstered heating demand but hit travel consumption by shutting airports and slowing road travel.

The latest indications of fundamentals of supply and demand for the United States, the world’s biggest oil burner, will not be released until Wednesday and Thursday. Figures published last week showed a big drop in crude inventories, although they were still higher than a year ago.

Another factor some traders were looking at was the February/March crude spread on NYMEX, which was in a 73 cents contango on Tuesday at midday.

“Minus 73 cents on that spread is not indicative of a tight market,” said Skokie Energy’s Korn.

(Reporting by Jeffrey Kerr and Matthew Robinson in New York; Robert Gibbons in Houston; Barbara Lewis in London; Seng Li Peng in Singapore; Editing by Walter Bagley)

Oil maintains price rise to over $91; light volume