More Stimulus Hopes Lift Oil

SLBAhead of yet another Federal Open Market Committee meeting on Wednesday, traders again speculated that Federal Reserve Chairman Ben Bernanke and his colleagues at the central would do something to jump-start the sagging U.S. economy. That hope and speculation was enough to lift oil prices on Tuesday as NYMEX-traded crude for July delivery added 76 cents to settle at $84.03 a barrel. In London, Brent crude fell 29 cents to close at $95.76 per carrel.

 

Aside from the FOMC buzz that permeated the oil pits today, black gold got a lift from some decent U.S. economic data. In economic news, the Commerce Department said housing starts fell 4.8% to a seasonally adjusted annual rate of 708,000. The April number was revised higher to a seasonally adjusted annual rate of 744,000. New construction rose 28.5% last month from May 2011.

 

Spain, the Euro Zone’s fourth-largest economy was able to auction $3.8 billion in 12-month bills, topping the original target of $3 billion, suppressing alarmingly high yields on Spanish 10-years in the process.

 

Despite gains across the energy complex, natural gas futures gave back some of Monday’s large gains with the U.S. Natural Gas Fund (NYSE: UNG) falling 3.4% on volume that was slightly above the daily average. Even with today’s decline, the highly volatile UNG has surged more than 14% in the past five trading days.

 

After trading higher by more than 100 points for most of the session, the Dow Jones Industrial Average finished with a gain of "just" 95 points, but that was enough to lift Exxon Mobil (NYSE: XOM) to a gain of 1.7%, which came on above average turnover. Chevron (NYSE: CVX), the second-largest U.S. oil company, added 0.6%.

 

Mexico’s Pemex, the country’s state-run oil company, awarded four contracts for exploration of mature fields today. Chevron was among the bidders for the Mexican contracts, but a Reuters report on the news noted Chevron did not win a contract. The same report said Schlumberger (NYSE: SLB), the world’s largest provider oilfield services, won a services deal.

 

Mexico is the world’s seventh-largest oil producer, but production there has been declining for several years and the country is desperate to boost its oil production, making partnerships between Pemex and foreign companies essential.

 

The independent oil names notched strong performances today as well. Apache (NYSE: APA) was the laggard with a gain of just 0.12%, but Anadarko Petroleum (NYSE: APC) and Devon Energy (NYSE: DVN) each flirted with gains of 2%.

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