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Oil prices jump again in volatile trading week

Oil prices jump again in volatile trading week

Oil prices rose sharply Wednesday as a large interest rate cut in China and news of a possible Russian output cut appeared to counter another round of dour economic news and larger-than-expected crude stockpiles in the U.S.
Trading followed this week's established pattern of volatility in the oil markets.
Light, sweet crude for January delivery jumped more than 7 percent, or $3.67 to settle at $54.44 a barrel on the New York Mercantile Exchange.
In London, January Brent crude rose $3.57 cents to settle at $53.95 on the ICE Futures exchange.
Oil opened the week with a 9 percent swing upward Monday after the U.S. said it would bail out Citigroup, followed by a nearly 7 percent decline the following day on a raft of ominous economic data.
Crude's rebound Wednesday was not unexpected, some analysts said, noting the holiday week and relatively low trading volumes on the floor of the New York Mercantile Exchange.
"This has always been a very difficult week in which to generate a trend, and traders tend to be getting out of positions more than getting into them," the firm Cameron Hanover said in its Daily Energy Hedger report Wednesday.
Crude initially gave back early gains Wednesday after a new government inventory report showed far more crude and gasoline in storage than was expected.
For the week ended Nov. 21 crude inventories jumped by 7.3 million barrels, the Energy Department's Energy Information Administration said in its weekly report. Analysts had expected a boost of only 400,000 barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
Gasoline inventories rose by 1.9 million barrels. Analysts expected stockpiles to rise by only 300,000 barrels. Demand for gasoline over the four weeks ended Nov. 21 was 2.8 percent lower than a year earlier, averaging about 9 million barrels a day.
But in a report released a day early because of the Thanksgiving holiday, the EIA said natural gas storage levels fell more than expected last week and are 3.1 percent below the year-ago average.
In its weekly report, the government said natural gas inventories held in underground storage in the lower 48 states dropped by 66 billion cubic feet to about 3.42 trillion cubic feet for the week ending Nov. 21. Analysts had expected a drop of between 43 billion and 48 billion cubic feet, according to a survey by Platts.
In equities trading, Wall Street extended its gains into a fourth session Wednesday as investors digested mixed economic readings on jobless claims, orders for big-ticket items and personal spending.
Among the reports, the Labor Department said initial requests for unemployment benefits fell to a seasonally adjusted 529,000 from the previous week's upwardly revised figure of 543,000. That is lower than analysts' expectations of 537,000. Still, the initial claims remain at recessionary levels.
Meanwhile, the Commerce Department said orders to U.S. factories for big-ticket manufactured goods plunged in October by the largest amount in two years as the economy weakened. The 6.2 percent drop was more than double the 3 percent decline economists expected.
The Commerce Department also said Americans cut back on their spending in October by the largest amount since the 2001 terrorist attacks. Consumer spending plunged by 1 percent last month, even worse than the 0.9 percent decline that had been expected.
Overseas, China's biggest interest rate cut in 11 years _ and the fourth in three months _ was expected to lead to increased demand for oil.
"This could help speed up the Chinese economy's recovery from the current slowdown and therefore encouraging for oil demand growth in the future," said a report from Sucden Research in London.
Also affecting prices was news that Russia, one the world's largest crude producers, may join OPEC in output cuts, Energy Minister Sergei Shmatko said in New Delhi on Tuesday, Press Trust of India news agency reported.
JBC Energy in Vienna noted that it has been nearly seven years since non-OPEC oil exporters Russia, Norway and Mexico last made coordinated moves to cut output.
In other Nymex trading, gasoline futures jumped 8.49 cents to close at $1.1798 a gallon. Heating oil gained 3.79 cents to settle at $1.7367 a gallon while natural gas for January delivery jumped 49.2 cents to settle at $6.878 per 1,000 cubic feet.
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Associated Press writers Pablo Gorondi in Budapest, Hungary, and Alex Kennedy in Singapore contributed to this report.


Updated : 2021-10-20 16:23 GMT+08:00