MARKET PREVIEW: Oil Futures Up as Economic Recovery Seen
CRANBURY, N.J. (DTN)
– New York Mercantile Exchange nearby delivery oil futures were higher
overnight, with the heating oil contract posting a better than one-week high
w
hil
e crude held within Thursday’s trade range.
February RBOB futures posted a fresh 3-1/2 month spot
high at $2.8654 gallon.
Oil futures are
extending gains triggered by Wednesday’s announcement by the Federal Reserve
that they would maintain the federal fund rate near zero through the end of
2014, beyond December’s guidance that it would keep the ultra-low rate through
mid-2013, and six months longer than the market expected. The Fed also laid the
groundwork for a third round of quantitative easing, which refers to active
market participation by the central bank in federal instruments such as bonds.
The Fed’s action stirred bullish sentiment
for U.S. economic growth, with an expanding economy using more energy.
Additionally, a weaker dollar has an inflationary impact on oil prices, while
near-zero interest rates drive investment dollars into equities and
commodities.
This morning,
the U.S. dollar was holding to an inside trade day in spot index trading,
edging off Thursday’s seven-week low. The S&P 500 were lower in futures
trading after an impressive move higher in January, reaching a six-month high
midweek.
Economic data
sets have supported a view that the U.S. economy is on the mend nearly three
years after the end of the Great Recession, although the recovery is uneven.
Housing data shows a sluggish and bumpy recovery, while the U.S. unemployment
rate was at 8.5% in December.
The Bureau of
Economic Analysis will release its advanced estimate for fourth quarter 2011
U.S. Gross Domestic Product at 8:30 AM ET.
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