Crude prices improve while cost of homes in the US drop
Crude went up in N.Y. following a slow decline in residential property prices in some U.S. cities two months ago. This fanned hopes of a much-awaited improvement in the U.S. economy.
Futures likewise rose by 0.4 percent when the S&P/Case-Shiller home price index registered a 3.5 percent drop, by far the lowest 12-month decline since February a year ago. As equities went up beyond projected earnings, crude took a similar turn. Based on Bloomberg’s survey, a report from the Energy Dept. reveals that crude supplies increased to 2.8 million barrels.
Strategic Energy & Economic Research President Michael Lynch said “We are following all the economic headlines for signs of demand.” He commented that stock market results appeared to have given oil investment a much needed lift.
Current crude oil prices on June delivery moved up 44 cents, landing at an oil price per barrel of $103.55, as seen on the NYMEX. This year, prices improved by 4.8 percent.
Prices moved up when the API announced last week that oil supplies in the U.S. were cut down by 985 thousand barrels to 368.4 million barrels. Electronic trading results showed that oil prices per barrel rose by 0.6 percent, settling at $103.72 by 4:32 p.m.
Brent crude for June settlement went down by 0.5 percent, leading to a price per barrel of $118.16, based on ICE Futures data.
The S&P/Case-Shiller index rose from the previous month. Another report revealed that auctions of new residential properties in the U.S. were better than March projections.
Annual home sales registered at 328,000, translating to a 7.1 percent drop from a previous 353,000. The numbers are expected to slip further, to 319,000 by March, experts project.
Confluence Investment Management’s Chief Strategist Bill O’ Grady said “The housing numbers aren’t great but they have improved.” This improvement could somehow drive the market to ponder on how to invest in home auctions and recognize opportunities when they arise.
Based on Bloomberg’s survey, oil stockpiles in the U.S. will reach peak levels since May. Gas supplies last week could have declined to 1.5 million. Diesel fuel and heating oil grew by 500,000 barrels.
“The DOE report tomorrow is expected to show another supply increase, which will be bearish,” according to Citi Futures Perspective analyst, Tim Evans.
Trading sectors agree that crude oil prices in the long term will reach an average price per barrel of $90 to $95. Alex Beard, GLEN head of oil commented that said average can be viable even from a long-term perspective.