Prices close above $41/barrel
Crude-oil futures rose on Tuesday, 28 October 2014 at Nymex ending a two-day losing streak as prices under $80 seemed to attract bargain hunters. Oil markets regained ground after Goldman Sachs on Monday slashed price forecasts for next year, denting prices.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December rose 42 cents, or 0.5%, to settle at $81.42 a barrel.
Inventory forecasts due this week are expected to show a larger-than-average increase in U.S. supplies, which will likely put futures prices under pressure again, later in the week. The closely watched inventory data from the U.S. Energy Information Administration is due Wednesday. Market expects oil inventories to rise 2.8 million barrels on the week ended 24 October 2014. In the past five years, increases for the week have averaged 1.9 million barrels.
Focus of the market place is on the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve's regular meeting that began on Tuesday morning and ends Wednesday afternoon. As usual, the Wednesday afternoon statement from the FOMC will be very closely scrutinized by the market place. Most believe the Fed will formally end its monthly bond-buying program, called quantitative easing. Traders will also be looking for clues in the statement about future direction of monetary policy, including at what point the Fed will start to raise U.S. interest rates.
In overnight news, Sweden's central bank cut its main lending rate to zero percent Tuesday, in an attempt to produce some price inflation. The entire European Union is on the verge of serious price deflation. The European Central Bank has recently stimulated its monetary policy, and more measures are likely coming soon from the ECB.
Economic data at Wall Street included Durable Orders, Case-Shiller 20-City Index, and Consumer Confidence. September durable goods orders fell 1.3%, which was worse than the 0.6% increase expected. The drop followed the prior month's revised decline of 18.3% (from -18.4%) and was accented with a 2.8% decline in machinery orders, a 2.5% decline in computer and electronic product orders, and a 3.7% drop in orders for transportation equipment. Excluding transportation, durable orders decreased 0.2% (consensus 0.5%) to follow the prior month's revised increase of 0.7% (from 0.4%) . The Case-Shiller 20-city Home Price Index for August rose 5.6%, while a 5.5% increase had been expected by the consensus. This followed the previous month's increase of 6.7%.
The Conference Board's Consumer Confidence Index jumped to 94.5 in October from an upwardly revised 89.0 (from 86.0), while the consensus expected a reading of 87.2 Consumer confidence is now at its strongest point since October 2007 and has finally recovered from the Great Recession.
Among other energy products on Tuesday, gasoline for November rose 2.59 cents, or 1.2%, to finish at $2.1961 a gallon on the Nymex. November heating oil gained 1.78 cents, or 0.7%, to settle at $2.4931 a gallon on the Nymex.
Natural gas for November delivery advanced 8.80 cents, or 2.5%, to end at $3.6490 per million British thermal units. That was the largest one-day gain for the commodity in three weeks.
