U.S. benchmark West Texas Intermediate for delivery in February rose 79 cents and sent positive signals among traders. Earlier on Tuesday, U.S. oil prices rose as it is expected that crude inventories which have been rising the whole of 2013 may finally be declining this year. The last year, a major reason behind the decline of WTI was that the U.S. had huge crude stockpiles.
The latest reports show that the U.S. benchmark West Texas Intermediate for delivery in February rose 79 cents and finally settled at $92.59 a barrel on the New York Mercantile Exchange. On the other hand, European benchmark Brent crude for February delivery could not maintain the earlier gains and fell 36 cents to $106.39 a barrel in London trade.
December retail sales Was Up by 0.2 Percent
The major reason behind the upward movement of WTI was that the U.S. saw a rise in retail sales of oil. The U.S. Commerce Department in its report admits that December retail sales showed a 0.2 percent increase during the critical holiday shopping period. According to the organization, it was better than the flat sales expected and pleasantly surprising.
On the other hand, analysts with keen eye on the WTI prices say that crude prices were positioned for a rally after a steep sell-off in recent sessions. However, they fell from the highs of $100.32 a barrel on December 27 to $91.80 on Monday. It is to be noted that retail sales are part of the consumer spending that is the prime driver of the U.S. economy.
The Expected report may show a Significant Decline in the U.S. Stockpiles
The U.S. which is currently the world’s biggest crude consumer is expected to become a leading producer of oil in the next couple of years. Moreover, as has been reported earlier there has been a fairly sizable decline in the price of crude oil since the beginning of the year, even then investors are bullish.
In fact, a lot of investors are coming in to take advantage of the lower price level which is at their historical lower levels. The U.S. stockpiles have been a major reason behind the lower crude prices. Currently, according to some analysts a decline is essential for stable crude. An estimate says that a decline of 800,000 barrels of crude is expected in the report to come.
To contact the reporter of this story: Jonathan Millet at email@example.com