Monday, November 29, 1999

Oil up amid mixed economic, inventory data

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U.S. crude oil futures bounced up on Wednesday in a choppy session as oil and equities markets reacted to mixed economic data and a U.S. government inventory report the showed crude oil stocks higher, but gasoline stocks lower."Oil was technically strong yesterday on the move above $76.30 and the S&P 500's move above it's 200-day moving average," said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.At 12:55 p.m. EDT (1655 GMT), U.S. crude for July delivery was up 72 cents at $77.66 a barrel, trading from $76.06 to $77.90. In London, ICE Brent crude for August delivery was up 94 cents at $78.04 a barrel.Ahead of the oil inventory data, there was a mixed bag of data on the U.S. economy. U.S. industrial production rose faster than expected in May, but U.S. housing starts fell more than expected during that month."The dollar pulled back and euro cut some of its loss and, while the crude data was bearish, gasoline is being supported by the inventory drop," said Ilczyszyn.The U.S. Energy Information Administration said crude oil inventories rose 1.7 million barrels last week. The expectation was that stockpiles would be down 1.2 million barrels.A Tuesday report from the American Petroleum Institute, an industry group, also showed a surprise rise in U.S. crude stocks, up 579,000 barrels.The EIA data showed gasoline stocks fell 700,000 barrels, against expectations for a small build, and distillate stocks rose 1.8 million barrels, more than expected."The (inventory) report seems to be slightly bearish, but I don't think it's a significant enough change in the statistics to be a game changer here. I think that we are mirroring the broader financial markets," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.Oil prices have rebounded from the 2010 low of $64.24 a barrel struck May 20 and ended at a five-week high on Tuesday, rallying along with the euro and Wall Street on revived confidence about global economic recovery.Gains in the last two sessions have been fuelled by rallying equities. World stocks rose and the S&P 500 index moved above its 200-day moving average on Tuesday, helping push U.S. crude prices above their key technical 200-day moving average.U.S. stocks were mixed near midday Wednesday in New York. The Nasdaq turned higher and traded near flat, while the Dow and S&P 500 trimmed losses.The euro was little changed against the dollar as a recovery in U.S. stocks lifted risk appetite and offset fresh concerns about Spain's credit and banking system.Iran's dispute over its nuclear program also was seen as supportive to crude oil. The United States was to unveil on Wednesday new economic steps it plans to take to try to pressure Iran and build on the latest round of U.N. sanctions, according to an Obama administration official said.Also supportive were concerns about drilling delays in the U.S. Gulf of Mexico as producers shy away from deepwater drilling following BP Plc's spill fouling the Gulf.But some market watchers think the accident could accelerate the shift away from traditional energy sources such as oil in the long term.(Additional reporting by the New York Energy Desk, Alejandro Barbajosa in Singapore, and Emma Farge and Alex Lawler in London; Editing by Walter Bagley)
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