By Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures rallied Thursday, headed for their fourth-straight session of gains, as a surprise interest rate cut in China helped fuel a rally among assets perceived as risky and pulled the dollar lower.
Crude for July delivery CLN2 +1.95% rose $1.61, or 1.9%, to trade at $86.63 a barrel on the New York Mercantile Exchange. Prices gained 0.9% on Wednesday.
The People’s Bank of China cut its benchmark lending and deposit rates by a quarter-point, with the move set to take effect Friday. Read more on the China rate cut.
Crude-oil prices were “pressing session lows coming out of the European session” when the Chinese central bank announced the cut in rates, said Michael Fitzpatrick, editor in chief of the Kilduff Report.
“This move has apparently allayed participants’ fears of crumbling of global energy demand consequent to the [European Union’s] conundrum,” he said. “It would be a mistake though to associate the rallying crude oil market of these last few days with a structural change in the underlying macro-economy.”
“This is a correction and there is probably a ‘trap door’,” he said. “A few comments from EU officialdom and hints from U.S. central bankers are not going to be enough to turn the massive vessel that represents the global economy.”
The market also awaited testimony by Federal Reserve Chairman Ben Bernanke on the economic outlook and monetary policy at 10 a.m. Eastern.
Meanwhile, further weakness in the U.S. dollar helped buoy dollar-denominated commodities such as oil.
The dollar index DXY -0.24% , which measures the greenback against a basket of six major currencies, traded at 81.963, down from 82.264 late Wednesday.
Global stock markets rose, with the Dow Jones Industrial Average DJIA +0.76% up more than 100 points following news of China’s cut in interest rates, which furthered hope for additional moves by global central banks, including the Fed.
With all those factors in the backdrop, prices for the petroleum products edged up. July gasoline RBN2 +1.15% added 3 cents, or 1.1%, to $2.72 a gallon and July heating oil HON2 +1.31% rose 4 cents, or 1.3%, to $2.71 a gallon.
July natural gas NGN12 -0.91% traded down 2 cents, or 1%, at $2.40 per million British thermal units.
The EIA will report data on last week’s natural-gas supplies in storage at 10:30 a.m. Eastern.
Analysts polled by Platts expect data to show an increase of between 53 billion cubic feet and 57 bcf. A build within those expectations would be less than the 81-bcf increase seen the same time a year ago, according to Platts.
Myra Saefong is a MarketWatch reporter based in San Francisco.
