MW: Oil futures gain as traders worry about potential storm
By Claudia Assis and Polya Lesova, MarketWatch
SAN FRANCISCO (MarketWatch) -- Crude-oil futures turned higher Friday, shaking off initial weakness as investors squared away their positions ahead of the weekend and worried about a potential tropical cyclone brewing in the Caribbean.
Light, sweet crude for August delivery added 74 cents, or 1%, to $77.28 a barrel on the New York Mercantile Exchange.
"We are putting some storm premium ahead of the weekend," heading squarely to the Gulf of Mexico and that could be upgraded, said Jim Ritterbusch with Ritterbusch and Associates in Galena, Ill.
The contract had finished slightly higher Thursday, thanks to a late-session rebound.
Prices also saw little resistance around the $78 a barrel, providing the green light for Friday's gains.
Crude-oil futures opened lower Friday but turned shortly after. It also held on to more modest gains after the U.S. government revised down estimates for first-quarter growth.
Oil looked at the stock market, and as futures held steady after the downward revision, oil kept its gains, Ritterbusch said.
"The stock market took that number well, and if the stock market doesn't care about (gross domestic product), oil doesn't either," he added.
The U.S. economy grew at a 2.7% pace in the first quarter, the Commerce Department said Friday, an annualized rate that came in lower than what government forecasters had previously projected. Economists have never been too impressed with the composition of growth in gross domestic product in the first quarter. More than half of the GDP increase came from inventory rebuilding, a temporary factor.
The potential tropical was of much more concern. The area of low pressure is centered about 150 miles east-northeast of Cabo Gracias a Dios, a cape located on the border between Honduras and Nicaragua, the U.S. National Hurricane Center said in an outlook published at 2 a.m. Eastern time Friday.
This weather system could become a tropical depression before it reaches Mexico's Yucatan Peninsula in a couple of days. Also, the system has a 60% chance of becoming a tropical cyclone during the next 48 hours, the center said.
The latter possibility prompted concerns that a tropical cyclone may hamper the efforts of BP PLC (BP 27.18, -1.56, -5.43%) (UK:BP. 304.80, -20.45, -6.29%) to clean up the oil spill in the Gulf of Mexico. The response to the spill has cost BP about $2.35 billion to date. Shares of BP dropped 4% in New York.
On Wall Street, stock turned lower at the open.
The dollar index (DXY 85.81, +0.08, +0.09%) , which tracks the performance of the greenback compared to a basket of six other currencies, gained 0.1% to 85.81, moderating earlier gains.
