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Crude Oil Soars To End Above $97 On Supply Concerns

Crude Oil Soars To End Above $97 On Supply Concerns

U.S. crude oil ended sharply higher for a third straight session Friday, with increased tensions in the Middle East fueling supply concerns after the U.S. administration indicated it would arm the Syrian rebels fighting President Bashar al-Assad's regime. Investors also digested news reports the Federal Reserve would likely make efforts to soothe concerns over tapering down the monetary easing program, while ignoring some soft macroeconomic data out of the U.S.

In some disappointing economic data, U.S. industrial production in May came in unexpectedly unchanged, with a sharp drop in utilities output offset increases in mining and manufacturing output, a U.S. Federal Reserve report showed Friday. Meanwhile, consumer sentiment in the U.S. unexpectedly deteriorated in June, with the consumer sentiment index pulling back off a near six-year high, a Thomson Reuters and University of Michigan report showed.

On a positive note, producer prices in the U.S. rose more than anticipated in May, with growth largely attributed to a notable rebound in energy prices, a Labor Department report said Friday.

Light Sweet Crude Oil futures for July delivery, the most actively traded contract, jumped $1.16 or 1.2 percent to close at $97.85 a barrel on the New York Mercantile Exchange Friday.

Crude prices for July delivery scaled a high of $98.25 a barrel intraday and a low of $96.42.

Yesterday, oil settled higher on some better than expected weekly initial jobless claims and retail sales data out of the U.S., even as investors mulled over the more-than-anticipated jump in U.S. crude oil stockpiles last week.

The dollar made gains against the euro on Friday with producer prices exceeding expectations, an indicative sign of an improving economy. Nevertheless, some soft consumer sentiment data checked gains made by the dollar against some major currencies.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.69 on Friday, down from 80.72 late Thursday in North American trade. The dollar scaled a high of 81.01 intraday and a low of 80.59.

The euro traded lower against the dollar at $1.3333 on Friday, as compared to $1.3375 late Thursday in North America. The euro scaled a high of $1.3374 intraday and a low of $1.3296.

In economic news, the U.S. Federal Reserve said industrial production in May came in flat, following a revised 0.4 percent decrease in April. Economists expected production to rise by 0.2 percent compared to the 0.5 percent drop originally reported for the previous month. While mining output rose by 0.7 percent in May after rising by 1.1 percent in April, manufacturing output inched up by just 0.1 percent following a 0.4 percent drop in the previous month.

Consumer sentiment in the U.S. unexpectedly deteriorated in June, with a preliminary reading on the consumer sentiment index at 82.7, down from the final May reading of 84.5, according to a Thomson Reuters and the University of Michigan report. Economists expected the index to come in unchanged compared to the previous month.

The U.S. Labor Department said its producer price index rose by 0.5 percent in May following a 0.7 percent decrease in April. Economists expected producer prices to edge up by 0.2 percent.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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