Economic Data Boosts Oil
Published on Thursday, 23 February 2012 17:35 Written by Todd Shriber
New York, February 23rd (TradersHuddle.com) – Supportive economic data from the U.S. and Germany, the Euro Zone’s largest economy, helped lift oil prices again (the winning streak is now six days) as NYMEX-traded crude for April delivery rallied $1.55, or 1.5%, to settle at $107.83 a barrel. In London, Brent crude added just over half a percent to settle at $123.62 a barrel. While the weekly jobless claims number of 351,000 was the same as what was reported last week, that was still better than the 355,000 economists were expecting. More importantly, the four-week moving average, which is more widely followed because it drowns out volatility, fell 7,000 to 359,000, the lowest level since March 2008.
Germany’s Ifo institute said its German business climate index, based on a survey of 7,000 executives, climbed to 109.6 in February from January’s 108.3 beating the reading of 108.8 economists were expecting, Bloomberg reported. It may be sometimes ignored by U.S. investors, but as one of the 10 largest economies in the world and an export-driven economy at that, Germany is a voracious buyer of oil.
For the first time in what feels like a while, the United States Oil Fund (NYSE: USO) really impressed. The ETF gained almost 2% on decent volume and a look at the chart indicates old resistance at $40 might be turning into new support. Today was the first day in what feels like months that USO sharply outperformed the United States Brent Oil Fund (NYSE: BNO). That’s not say BNO had a bad day. It did not. BNO was up almost 0.8%, touched another 52-week high and accomplished those feats on volume that was almost double the daily average.
It was a decent day for the Dow Jones Industrial Average, but Chevron (NYSE: CVX) with a gain of almost 0.8% impressed far more than larger rival Exxon Mobil (NYSE: XOM). Exxon was up just a tenth of a percent. Of the four largest U.S. oil companies, the best performer today by a sizable margin was the fourth-largest member of the group, Occidental Petroleum (NYSE: OXY). California-based
Occidental gained almost 1.4% despite news that its 2011 year-end proved reserves were 3.176 billion barrels of oil equivalent, compared with 3.167 billion a year earlier, Reuters reported. The good news is that the vast majority of Occidental’s reserves are oil or other non-gas liquids, implying the company is levered to falling natural gas prices than some of its rivals are.
Speaking of natural gas, the United States Natural Gas Fund (NYSE: UNG) slid 1.4% today a day after engineering a reverse split to artificially boost the ETF’s share price. Much more impressive was the equities-based First Trust ISE-Revere Natural Gas Index Fund (NYSE: FCG), which jumped 2.1% on above average turnover. A move above $20 would confirm a breakout for FCG.