OIL FUTURES: Crude Rises On Housing Data, Foreign Worries
December 20 2011 - 10:28AM
Dow Jones News
Oil futures jumped in early trading Tuesday along with equity
markets after the latest report on U.S. housing starts showed home
building surging well past expectations, in a positive sign for the
U.S. economic recovery.
The market was also watching news of unrest in an oil-producing
province of Kazakhstan and a meeting of world leaders in Rome to
consider sanctions on Iran's oil exports.
Light, sweet crude for January delivery was up $2.92, or 3.1%,
to $96.80 a barrel on the New York Mercantile Exchange. Brent crude
on the ICE Futures Europe exchange was up $2.92, or 2.8%, to
$106.56 a barrel. Volume was far below average because of the
holiday season. The January Nymex contract expires at the end of
trading Tuesday.
Analysts and traders said the market was bouncing back from an
oversold condition earlier in the week as market sentiment has
improved about Europe's financial stability and the U.S. economic
recovery.
"It does seem that the fears that bubbled up to the surface last
week have subsided a bit," said Gene McGillian, a broker and
analyst with Tradition Energy.
The Commerce Department said housing starts increased 9.3% to a
seasonally adjusted annual rate of 685,000, the highest level in 19
months. Economists expected a rise of 0.3%. Stocks rose as the
market opened, with the Dow Jones Industrial Average rocketing 149
points in the first minute of trading.
In Kazakhstan, the government declared a state of emergency in
the Caspian oil town of Zhanaozen after clashes between laid-off
oil workers and security forces during an anti-government protest.
Kazakhstan exported 1.5 million barrels of oil a day in 2010.
In Rome, leaders of 11 nations including the U.S. and Saudi
Arabia are meeting to discuss sanctions of Iranian oil exports.
Iran is the second-largest exporter of crude in the Organization of
Petroleum Exporting Countries, supplying 2.5 million barrels per
day to the world.
Front-month January reformulated gasoline blendstock, or RBOB,
recently rose 6.76 cents, or 2.7%, to $2.5567 a gallon. January
heating oil was up 5.98 cents, or 2.2%, to $2.8402 a gallon.
-By Christian Berthelsen, Dow Jones Newswires; 212-416-2381;
christian.berthelsen@dowjones.com.