MW: Oil rises on weaker dollar, Europe bond auction
By Claudia Assis and V. Phani Kumar, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures advanced Thursday as the U.S. dollar eased and debt auctions in Spain and Italy went relatively well, taking off some euro-zone risk off the table.
Crude-oil futures for February delivery CL2G +1.23% rose $1.67, or 1.7%, to $102.53 a barrel on the New York Mercantile Exchange.
Oil declined 1.3% on Wednesday, in part due to a surprise increase in inventories.
That was being “swept under the carpet by risk appetite” on Thursday, said Matt Smith, an analyst with Summit Energy in Kentucky.
The “decent government bond auctions in Spain and Italy point to renewed faith in their economies. The optimism spurred by these sales raises hopes that these countries can overcome their fiscal difficulties. Hence, the euro is rallying, equities are shaking their stuff, and crude is in positive territory,” he added.
Italy and Spain’s closely watched bond auctions went well, with borrowing costs falling for both countries. The bonds also rallied in the secondary market.
The European Central Bank kept its policy rates unchanged at the end of a meeting Thursday. In a press conference after the decision he said the euro zone continues to face downward risk to its outlook.
Meanwhile, February gasoline RB2G +1.26% rose 5 cents, or 1.8%, to $2.81 a gallon. Heating oil for the same month HO2G +1.57% advanced 6 cents, or 2.1%, to $3.13 a gallon.
February natural gas NG12G -2.96% continued its decline, off 4 cents, or 1.5%, to $2.76 per million British thermal units. Natural gas on Thursday settled at its lowest since September 2009.
Tim Evans, an energy analyst at Citi Futures Perspective, said that while uneven distribution of energy stocks within the Organization for Economic Cooperation and Development might be a bullish factor behind oil prices, “we still don’t see tightness.”
He said that although geopolitical risks could disrupt oil supplies if one waited long enough, “there is no guarantee that the timing will be to the liking of the money managers already loaded up with long positions.”
“Until we have a supply disruption, the physical market will be well supplied, and those investors will be at risk,” Evans said.
The U.S. dollar index DXY -0.39% , which measures the greenback’s movements against a basket of six other major currencies, slipped to 80.839 from 81.313 in late North American trade Wednesday.
