Oil Bounces Back, Sort Of
- Published on Thursday, 24 May 2012 17:31
- Written by Todd Shriber
New York, May 24th (TradersHuddle.com) – Markets were a bit more sanguine on Thursday than they were Wednesday as equities were able to mount another late-day come back that help oil’s cause. NYMEX-traded crude for July delivery added 76 cents to settle at $90.66 per barrel after closing below $90 yesterday. In London, Brent crude gained 99 cents to $106.55 per barrel. Yesterday’s move below $90 was the first time since October 2011 and that may have lured in some trader anxious to do some dip buying today.
The dollar was once again stronger as the PowerShares DB US Dollar Index Bullish (NYSE: UUP) added 0.4%. That ETF is now within six cents of its 52-week high. Data points were mixed and it’s fair to say they neither helped nor hindered oil all that much today.
In economic news, the weekly jobless claims number fell to 368,000 last week from 370,000 the week before. The less volatile four-week moving average has fallen for three straight weeks. Continuing claims declined to 3.26 million. The Commerce Department said durable goods orders rose 0.2% in April after a 3.7 percent decline in March. Core capital goods orders fell 1.9% following a 2.2% drop in March. Excluding transportation, durable goods orders fell 0.6% compared with a 0.8% decline in March.
Talks in Baghdad between several Western powers and Iran regarding that country’s nuclear program continued today and that may have kept traders from making any large bets on oil. Earlier this year when traders speculated Iranian supply was being withdrawn from the market, oil was bid higher, but it has since become evident that other OPEC members have made up for lost Iranian supply.
Said differently, if Iran can assuage the West that its nuclear program isn’t as nefarious as some have thought, than the country can back to selling more crude to large customers and that would probably push oil prices even lower.
Another factor keeping a lid on oil prices is Europe, no surprise about that. It is now apparent that seven of the 17 Euro Zone countries are in recessions and that number of course includes Greece, Italy, and Spain. The European Union is a major oil importer and the longer the region contracts while showing no signs of growth, the harder it will be for oil bulls to attack the lofty levels seen on futures earlier this year.
Looking at oil equities, Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) both notched small gains, but the independents remain week. Anadarko Petroleum (NYSE: APC) and Apache (NYSE: APA) both closed down for the day and both are trading dangerously close to their 52-week lows.
Recent Trading Ideas
Latest Partner Headlines