Crude Oil Rises After U.S. Economy Expands More than Forecast
Source: Bloomberg, Mark Shenk (10/29/09)
"It would appear that this would lead to increased demand."
Oil climbed as much as 2.6% after the Commerce Department said that the world's largest energy-consuming country expanded at a 3.5% annual pace from July through September. The economy was forecast to strengthen at a 3.2% annual pace, according to a Bloomberg News survey.
". . .now the only question is what the pace of the recovery will be," said Bill O'Grady, chief market strategist at Confluence Investment Management in St. Louis. "It would appear that this would lead to increased demand."
Crude oil for December delivery rose $1.89, or 2.4%, to $79.35 a barrel at 11:02 a.m. on the NYMEX. Futures are up 78% this year and climbed to a one-year high of $82 a barrel on Oct. 21.
The economy shrank 3.8% in the 12 months to June, the worst performance in seven decades. The four consecutive decreases through the second quarter mark the longest stretch of declines since quarterly records began in 1947.
The number of Americans collecting unemployment insurance fell more than forecast to the lowest level in seven months, a government report showed. Continuing claims for jobless benefits declined by 148,000 to 5.8 million in the week ended Oct. 17, the lowest since March 21 and biggest weekly drop since July, the Labor Department said today in Washington.
"Eighty dollars has proven to be a real stumbling block for crude oil," said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. "We're going to need a more definite increase in demand in order to push prices through that level. Currencies, equities and other commodities will be pointers in the meantime."