Crude Oil Rises Above $40 in New York for First Time in 3 Months
Andrey Rudakov/Bloomberg News
Oil surged above $40 a barrel in New York for the first time since December as central banks from the United States to Norway signaled they will continue to provide economic stimulus to support demand.
The Bloomberg Dollar Spot Index fell a second day after the Federal Reserve scaled back expectations for the pace of interest-rate gains. A weaker dollar bolsters investor demand for commodities priced in the currency. U.S. crude output slid to the lowest level since November 2014 and supplies expanded by 1.32 million barrels, the smallest gain in five weeks, according to an Energy Information Administration report March 16.
"It’s primarily a dollar story right now," said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $3.4 billion. "The weak dollar is bullish for all commodities, especially oil."
West Texas Intermediate oil has surged 54% from a 12-year low touched last month on speculation a global surplus will ease. American shale output is falling, and some of the world’s biggest producers, including Saudi Arabia and Russia, are pledging not to raise their production.
WTI for April delivery rose $1.74, or 4.5%, to settle at $40.20 a barrel March 17 on the New York Mercantile Exchange. It is the highest settlement since Dec. 3. Total volume traded was 19% above the 100-day average at 2:44 p.m.
Brent for May settlement climbed $1.21, or 3%, to $41.54 a barrel on the London-based ICE Futures Europe exchange. Futures ended the session at the highest level since Dec. 4. The global benchmark crude closed at a 12-cent discount to May WTI.
"Reaching $40 gets a lot of attention because it’s a nice round number," said Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees $128 billion of assets. "The $30 and $50 levels are more important in terms of investment decisions."
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|By Mark Shenk |
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