Oil Notches Best Day In 2 Months
Published on Thursday, 14 June 2012 17:18 Written by Todd Shriber
On rising hopes for additional monetary easing by the Federal Reserve and other global central banks, oil futures surged on Thursday, enjoying their best performance in two months. NYMEX-traded crude for July delivery popped $1.03 to $83.65 per barrel. In London, Brent crude for July delivery fell two cents to $97.11 per barrel. July Brent settled Wednesday at the lowest level since January 2011, the Wall Street Journal reported.
On a day that was surprisingly risk on in tenor, the PowerShares DB US Dollar Index Bullish (NYSE: UUP) notched a slightly lower finish despite more mixed U.S. economic data. In economic news, initial claims for jobless benefits increased by 6,000 to 386,000 last week. Analysts expected a reading of 375,000 new claims. The less volatile four-week moving average rose by 3,500 to 382,000 claims. The Labor Department said the consumer price index fell by 0.3% last month after being unchanged in April. Economists expected a decline of 0.2%.
The OPEC meeting in Vienna didn’t conjure up any major surprises as the cartel decided to keep its production quota at 30 million barrels per day. Problem is the quota is essentially meaningless because OPEC is currently pumping nearly 32 million barrels per day. Saudi Arabia, the largest OPEC producer is pumping about 10 million barrels per day.
Traders believe NYMEX crude is finding a floor because the $80 level has yet to be breached on the downside. Still, it was optimism for more quantitative easing that helped drive oil’s ascent higher today. The Federal Reserve meets next, but Chairman Ben Bernanke has refused to give any signal that more easing is imminent, which is to say today’s speculation that more easing will arrive may prove to be misplaced.
All that didn’t matter today as traders embraced energy commodities and equities. The United States Natural Gas (NYSE: UNG) surged 15% on volume that was nearly triple the daily average. The equity-based First Trust ISE-Revere Natural Gas Index Fund (NYSE: FCG) climbed almost 3%.
Cabot Oil & Gas (NYSE: COG) climbed almost 9% on volume that was nearly double the daily average. The gain was tied to QE3 speculation and the natural gas surge. Devon Energy (NYSE: DVN) notched a small gain, while Chesapeake Energy (NYSE: CHK) took advantage of the natural gas ebullience to gain 2.4%. Chesapeake is the second-largest U.S. natural gas producer behind Exxon Mobil.
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