Oil Gets A Lift From Uncle Ben

Published on Monday, 26 March 2012 17:33 Written by Todd Shriber

New York, March 26^th (TradersHuddle.com) – Comments from Federal Reserve Chairman Ben Bernanke proved to be a help to commodities markets on Monday. Bernanke reiterated what is now a long-standing view that interest rates will remain low, comments that lifted oil and other commodities while hampering the U.S. dollar. NYMEX-traded crude for May delivery gained 16 cents to settle at $107.03 a barrel. In London, Brent crude added 52 cents to close at $125.62 a barrel. The PowerShares DB US Dollar Index Bullish (NYSE: UUP) fell 0.62% on volume that was roughly doubled the daily average.

Bernanke’s comments that the Fed’s lax monetary policy, not his words, will remain in place, fanned speculation that investors might yet be treated to another round of quantitative easing. At the end of February, Bernanke roiled the commodities markets; gold in particular, by making comments that traders inferred meant that there would be no QE3. Today, the opposite seemed to be in play. Previous versions of quantitative easing plagued the U.S. dollar while bolstering commodities and commodities-related equities.

Supply concerns were also at play despite preliminary estimates from analyst saying that U.S. crude-oil inventories rose by 2.3 million barrels in the week ended March 23, according to the Wall Street Journal. Traders also seem to be aware that Saudi Arabia has been able to help scuttle fears that Iran, Syria and others would lead to major global shortfalls.

Shares of ConocoPhillips (NYSE: COP), the third-largest U.S. oil company, rose 1.1% on light volume despite the company reporting a problem with its gasoline making Fluid Catalytic cracking unit at its Bayway refinery in Linden, New Jersey, over the weekend, according to Reuters. The U.S. Northeast is already home to some of the highest gas prices in the country due to a lack of refineries and the need for specially formulated gasoline.

Speaking of gasoline, the United States Gasoline Fund (NYSE: UGA) gained almost 1% today on light volume, rising to its highest price since 2008. UGA is up roughly 20% year-to-date, and that’s ahead of the summer driving season. The ETF’s bullish run could easily continue, particularly if old resistance at $58 turns into new support.

Shares of Marathon Oil (NYSE: MRO) closed fractionally higher after the company said that, in the future, it expects to produce an average of 27,500 barrels oil equivalent per day this year in the Bakken Shale with that number rising to 38,000 boed by 2016. The new 2016 estimate is 15% higher than Marathon’s previous estimate.

With the Dow Jones Industrial Average surging over 160 points on the day, Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) both jumped more than 1% on the day. Independents Apache (NYSE: APA) and Anadarko Petroleum (NYSE: APC) were mixed on the day.