MARKET WATCH: Oil prices rise on US economic outlook

Oil prices rose July 31 in New York and London markets, which analysts attributed to positive US economic indicators and suddenly tightening world oil supplies.

Oil prices rose July 31 in New York and London markets, which analysts attributed to positive US economic indicators and suddenly tightening world oil supplies.

Federal Reserve officials ended a 2-day meeting in Washington, DC, on July 31, saying they will continue a program that buys $85 billion/month in Treasuries and mortgage-backed securities.

That stimulus boosts crude oil prices by weakening the dollar, making US crude cheaper to buy using other currencies.

In mixed signals regarding the economic outlook, Fed officials said they expect “economic growth will pick up from its recent pace.”

The US Department of Commerce said July 31 that the economy grew by 1.7%/year in the second quarter, better than a revised 1.1%/year for the first quarter.

Analysts await the Aug. 2 release of US employment statistics for July for hints about future energy demand.

Meanwhile, oil prices worldwide rose after Libyan officials reported a sharp decline in exports caused by protesters blocking shipments from various ports.

Energy prices

The September contract for benchmark US light, sweet crudes gained $1.95 to $105.03/bbl July 301 on the New York Mercantile Exchange. The October contract climbed $1.72 to $104.22/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up $1.95 to $105.03/bbl.

Heating oil for August delivery gained 3¢ to $3.04/gal on NYMEX. Reformulated stock for oxygenate blending for the same month climbed 2¢ to $3.04/gal.

The new front-month September natural gas contract gained 1.4¢ to $3.44/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., declined 1.4¢ to $3.44/MMbtu.

In London, the September IPE contract for North Sea Brent was up 79¢ to $107.70/bbl. Gas oil for August increased $2.50 to $910.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes rose 5¢ to $104.97/bbl.

Contact Paula Dittrick at paulad@ogjonline.com.

More in Economics & Markets