Energy

Good News on Economy Helps Lift Crude Oil Prices

Oil price rise graphic
thinkstock
Crude oil futures topped $96 a barrel earlier today, the highest price since last September. Rising prices follow today’s reports on new jobless claims and new housing starts, both of which indicate that the U.S. economy is continuing to grow and demand for energy will pick up.

The price of crude is also reacting today to the hostage situation in Algeria, which is signalling to crude traders that geopolitical tensions could be on the rise again. Geopolitics always plays a short-term role in pricing crude.

A third factor in today’s price hike is likely the surprise drop in U.S. crude inventories reported yesterday the U.S. Energy Information Administration. Although the decline was just 1 million barrels, it could be a sign that producers are cutting back on production in an effort to push prices back up. Crude prices declined more than 7% in 2012.

One final issue could be Saudi Arabia’s reported December cutback in production and an expected overall drop in OPEC supply.

The combination of these factors, and at least some worry that cuts to OPEC production cannot be made up by non-OPEC producers, are pushing the price of crude back up in the short term. Tomorrow’s release of Chinese GDP growth data could be the swing factor. If the Chinese economy grew more than the expected 7.8% in the fourth quarter, we’ll see another spike in crude prices tomorrow.

Want to Retire Early? Start Here (Sponsor)

Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?

Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.

Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.