Monday, August 2, 2010

Crude Oil Tops $80 a Barrel for First Time Since May as Equities Rise

Crude oil surged above $81 a barrel for the first time since May as a rally in global equity markets increased speculation the economy is strengthening. Oil jumped as much as 3.6 percent after equities climbed on better than expected earnings and the Institute for Supply Management’s U.S. manufacturing gauge fell less than forecast. The dollar dropped against the euro, boosting the investment appeal of commodities.

“Oil is following the S&P 500,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington. “Fundamentals don’t seem to matter. You don’t need to be an oil analyst anymore. You just need to be a stock market analyst.” Crude for September delivery rose $2.44, or 3.1 percent, to $81.39 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Earlier, it touched $81.77, the highest price since May 5. Futures climbed 4.4 percent in July, the biggest monthly gain since March. Prices are up 17 percent from a year ago.

The Standard & Poor’s 500 Index increased 2 percent to 1,123.86 following positive earnings reports from companies such as Humana Inc. and Oshkosh Corp. It jumped 6.9 percent in July, the biggest monthly advance since July 2009. The Dow Jones Industrial Average strengthened 191.94, or 1.8 percent, to 10,657.88. The MSCI World Index, a gauge of equities in 24 developed nations, rose 2.3 percent to 1,150.79, the highest level since May 13. European stocks climbed to a three-month high on gains among banks and basic resource producers.

“Equities did well in July and profits are generally OK, so people are feeling bullish across the board,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.....Read the entire article.

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