U.S. crude oil futures settled higher Tuesday, ahead of the Federal Reserve Open Committee meeting, with investors anticipating further quantitative easing to be forthcoming this time from the central bank. Prices also found support in some encouraging U.S. housing data and Spain achieving its target at a bond sale auction, albeit at high costs.
Investors also weighed developments in the eurozone after Greek leaders said they would form a group to renegotiate the agreed austerity measures.
The Spanish treasury raised 3.04 billion euros from sale of its 12- and 18-month bills, slightly higher than the 3 billion euros maximum sale target. Nonetheless, Spain's 10-year benchmark yield remained above 7 percent on Tuesday, a level considered as unsustainable, having touched an euro-era record of 7.14 percent yesterday.
Light Sweet Crude Oil futures for July delivery gained $0.76 or 0.9 percent to close at $84.03 a barrel on the New York Mercantile Exchange Tuesday.
Crude prices scaled a high of $84.41 a barrel intraday and a low of $82.28.
Oil ended lower yesterday on demand growth concerns as eurozone financial woes continued unabated. Investor concerns rose as yields at bond auctions in Span and Italy scaled record levels, notwithstanding some positive results from the Greek parliamentary elections.
The dollar index, which tracks the U.S. unit against six major currencies, was trading at 81.375 on Tuesday, up from 82.002 in North American trade late Monday. The dollar scaled a high of 81.99 intraday and a low of 81.29.
The euro pared early gains, but still traded higher against the dollar at $1.2691 on Tuesday, as compared to $1.2572 late Monday. The euro scaled a high of $1.2708 intraday and a low of 1.2570.
In economic news from the U.S., the Commerce Department put the number of privately owned housing starts at a seasonally adjusted annual rate of 708,000 for May, 4.8 percent below the revised April estimate of 744,000. The revised figures put the April housing starts at the highest since October 2008. Nevertheless, most economists expected at least a small continuation of the growth in May, with annual rate of housing starts forecast at 720,000.
From Europe, annual inflation in U.K. slowed unexpectedly in May to the lowest since November 2009, the Office for National Office said. Annual inflation eased to 2.8 percent, largely due to the slower increases in food and non-alcoholic beverage prices. Economists expected the rate to remain unchanged at 3 percent in May. Nonetheless, inflation continues to hover above the 2 percent target.
Meanwhile, survey results published by the Center For European Economic Research (ZEW) showed that German economic expectations declined more than expected in June. The ZEW Indicator of Economic Sentiment for Germany decreased by 27.7 points to a level of minus 16.9 points in June. This is the indicator's strongest decline since October 1998. Economists had forecast a decline to 2.3.
by RTT Staff Writer
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