Crude Continues Climbing Above $62/bbl in New York


"Oil rallied off of early lows on a higher-than-expected consumer confidence reading. . ."

Crude climbed to a new six-month high above $62/bbl as a rally in the equity market pulled up the commodity from an earlier low.

The U.S. dollar was gaining in early trading May 26 as investors poured money into that traditionally safe investment, but its value began to dive in midsession as investors switched to the equity market. Meanwhile in Nigeria, the Movement for the Emancipation of the Niger Delta (MEND) claimed to have destroyed several major oil pipelines and put a Chevron facility out of operation.

Oil rallied off of early lows on a higher-than-expected consumer confidence reading of 54.9, up from an expected 42.6. It "added further momentum to belief that the worst of the economic downturn is behind us," said analysts at Pritchard Capital Partners LLC, New Orleans.

Olivier Jakob at Petromatrix, Zug, Switzerland, said, "The Chevron outages in Nigeria, the foiled attack on a Total platform, narrow physical premiums as the North Sea enters in production maintenance were not enough to fully support the oil markets. West Texas Intermediate had finished last week on a relative strong note, but daily trading volume on [May 22] was at the lowest level of the year (even lower than on Jan. 2). Oil bulls were starting to lose confidence until the U.S. consumers came to their rescue with. . .the highest read of consumer confidence in eight months and the highest monthly gain since April 2003.

In Houston, analysts at Raymond James & Associates Inc. noted crude broke through its 200-day moving average to reach a six-month high. However, they cautioned, "While the technical charts would indicate that a good support level has formed around $60/bbl, lack of demand continues to leave crude oil inventories at historically high levels."

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