Oil exchange traded funds continued to regain ground Monday after a report showing U.S. consumer income and spending rose in July.
Traders digested a more optimistic outlook on the U.S. economy while Hurricane Irene caused less damage than expected.
Oil has also been supported by positive news on the U.S. economy and hopes for more stimulus from the Federal Reserve. Last week in a speech from Jackson Hole, Fed chief Ben Bernanke stated that the economic recovery will likely pick up in the second half, reports Margot Habiby for Bloomberg.
Consumer spending rose a higher-than-expected 0.8% for the month of July.
“The consumer spending numbers looked better than expected,” remarked Adam Sieminski, chief energy economist at Deutsche Bank, in the Bloomberg report. “People interpreted Bernanke’s comments positively because the chairman is not pushing the panic button.”
“As long as we look like we’re on the road to recovery, crude is going to be on the road to $100 once again,” said Carl Larry, director of energy derivatives and research at Blue Ocean.
U.S. Oil Fund (NYSEArca: USO) was up 2.4% in afternoon trade Monday.
Expectations of widespread oil refinery shutdowns and delays due to damages from hurricane Irene were quickly dispersed after the storm fizzled out over the weekend, reports Dan Strumpf for The Wall Street Journal.
“Initial indications are that the storm was less destructive than feared and as a result the products are shedding some of their storm premium that was injected late last week,” said Jim Ritterbusch, head of Ritterbusch & Associates, according to the report.
U.S. Oil Fund
Max Chen contributed to this article.
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