Crude Oil Commentary

Crude futures were treading water in early trading Tuesday, after recovering from Monday’s loss overnight.  Light, sweet crude for January delivery on the NYMEX settled up $2.37 at $100.14/bbl.

Crude oil prices elevated as the euro gained and the dollar fell. The euro zone’s sovereign-debt crisis has weighed heavily on the market for several weeks. Oil futures often trade inversely to the dollar, as the dollar-denominated commodity becomes more expensive for holders of other currencies.

There were several reports seemingly important to the oil market, though little seemed to gain traction, from Iran’s military exercises in the Strait of Hormuz, a key Middle East oil shipping channel, to OPEC reducing its forecast for 2012 crude demand, citing the potential for global economic decline. The International Energy Agency also lowered forecasts slightly for 2012 demand, citing economic worries.

Meanwhile, U.S. November retail sales grew less than expected, signaling a weak start to the holiday shopping season.

Global equities pulled back after a Dow Jones report said that German Chancellor Angela Merkel has rejected suggestions to raise the funding limit for the European Stability Mechanism, or ESM, which currently stands at €500 billion. The fund goes into effect next year and may run alongside the €440 billion European Financial Stability Facility.

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About JWM Energy Consultant
Professional Energy Consultant. I advise large energy-users on procurement strategies to reduce electricity and natural gas costs.

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