By Claudia Assis and V. Phani Kumar, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures shook off early weakness to trade higher Monday, as a speech by Federal Reserve Chairman Ben Bernanke was taken as an indication the central bank will stay the course on U.S. monetary policy.
Crude for May delivery CLK2 +0.17% rose 8 cents, or 0.1%, to $106.91 a barrel on the New York Mercantile Exchange. The contract added 1.4% on Friday, amid lingering geopolitical concerns.
U.S. stocks opened higher and the dollar eased, providing further support for oil.
Bernanke said labor-market improvements might not be sustained, which traders interpreted as a sign the Fed will continue with its accommodative policy.
Bernanke “has gone on record saying it will maintain an accommodative policy, which essentially means low interest rates, which promotes fund flows into commodities instead for capital appreciation. Hence crude is rallying,” said Matt Smith, analyst with Summit Energy in Kentucky.
Despite March’s volatility, crude is likely to end the month around the same prices as earlier in the month, he added.
“Tension surrounding Iran’s nuclear program is putting a floor under prices, while intermittent concerns surrounding the European debt crisis provide bouts of negativity. ... Recent data flow out of China has also thrust the emerging market economy into the spotlight as a slowing economy would have knock-on effect on oil demand,” Smith said.
Last week, a consultant said Iranian oil exports are set to fall by 300,000 barrels a day in March. The decline is a consequence of looming sanctions against Tehran and its nuclear program.
Supply concerns also centered around South Sudan, with news over the weekend that the new country and Sudan resumed negotiations on transit fees.
Analysts at Commerzbank estimated that 350,000 barrels of crude a day “are offline,” and despite the news “it would be premature to assume any rapid return of South Sudan to the market.”
Meanwhile, the ICE dollar index DXY -0.34% , which compares the U.S. unit to a basket of six currencies, stood at 79.119, down from 79.344 late Friday. Read Currencies report.
Elsewhere in the energy complex, gasoline for April delivery RBJ2 +0.70% rose 2 cents, or 0.5%, to $3.40 a gallon. April heating oil HOJ2 +0.50% was less than 1 cent higher, or 0.2%, to $3.22 a gallon.
Natural gas for April delivery NGJ12 -1.14% slipped 3 cents, or 1.5%, to $2.24 per million British thermal units.
