MW: Crude futures pivot off five-session losing streak
Crude-oil futures rebounded Friday, rising 2% on the heels of five consecutive sessions of declines, as gains in European and Asian stocks as well as speculation that the U.S. government may subsidize mortgage payments served to boost investor sentiment.
Crude for March delivery gained 67 cents at $34.67 a barrel in electronic trading on Globex.
Oil prices were supported "by a late rally on Wall Street following talk of a U.S. subsidy for mortgage payments, which lifted sentiment on hopes it would help the U.S. economy against a prolonged recession," said Nimit Khamar, analyst at Sucden Financial Research.
U.S. stocks closed virtually flat on Thursday, as early losses dissipated in the final hour on reports that the Obama administration's working on a plan to subsidize mortgage payments for troubled homeowners subject to an affordability test. The Dow Jones Industrial Average fell 6 points, while the S&P 500 rose 1 point and the tech-heavy Nasdaq Composite added 11 points.
Making mortgage subsidies available for at-risk homeowners would be different from other assistance programs, according to Reuters, because borrowers would go through a standard eligibility test and could be approved before their mortgage becomes delinquent. Read more.
On Thursday, benchmark crude fell $1.96, or 5.5%, to end at $33.98 a barrel on the New York Mercantile Exchange, the lowest closing level for a front-month contract since Dec. 19.
Despite the gains in oil prices early Friday, dismal economic data from the euro-zone reminded investors of the severity of the global slowdown.
The recession encompassing the nations using the euro as their currency deepened at a record pace in the final three months of 2008, with gross domestic product shrinking at a quarterly pace of 1.5%, economic data showed. The decline was the steepest since records began in 1995.
Germany earlier on Friday said fourth-quarter GDP contracted at its fastest quarterly pace since 1987, plunging 2.1% on a quarterly basis in the October-December period in a reflection of falling exports and moribund fixed-capital formation for Europe's biggest economy. See full story.
Also on Globex, March reformulated gasoline fell 2 cents to $1.23 a gallon and March heating oil dropped 1 cent to $1.31 a gallon. March natural gas futures rose 3 cents to $4.51 per million British thermal units.
