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Oil Prices Up Slightly in Light Trading

Oil Drums
Flickr User Bradley Gordon

Oil prices rose slightly Monday following a sharp, 7 percent drop last week and an encouraging report about U.S. housing that pointed to stronger oil demand.

Benchmark crude on Monday rose 35 cents to end at $93.88 per barrel in New York. Brent crude, which is used to price foreign oil that’s imported by U.S. refineries, rose 29 cents to finish at $103.64 per barrel in London.

A private index showed that builders are less worried about the housing market this month. The National Association of Home Builders/Wells Fargo builder sentiment index was a rare upbeat sign for the beleaguered industry. It suggested slightly less pessimism for the housing market. That could mean an uptick in home construction and increased use of diesel-burning equipment.

The volume of oil trading slowed on Monday with only two, holiday-shortened weeks left in the year. Many oil traders continue to sell their remaining investments for 2011 in an end-of-the-year purge that helped push oil prices nearly 7 percent lower last week.

Speculators “aren’t going to wait until Dec. 31,” independent analyst Jim Ritterbusch said. “They’re always going to try to beat other people out the door.”

Most of the traders left in oil markets are either working for refineries or some other commercial business that still needs to buy oil before the end of the year, Ritterbusch said.

At the pump, retail gasoline prices fell by less than a penny to a national average of $3.22 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has dropped about 76 cents since topping out near $4 per gallon this year.

Prices have tumbled in the second half of the year as gasoline demand plunged. Private and government surveys have shown that American drivers have cut way back on gasoline purchases this year.

U.S. gasoline consumption has dropped this year to the lowest level since 2004, according to government data.  The national average for gasoline is still 24 cents above levels at the same time last year, but that’s a slimmer margin than in the summer, when consumers were paying as much as $1 per gallon more for gasoline than they did a year before.

In other energy trading, heating oil fell 2 cents to end at $2.78 per gallon, and gasoline futures were virtually unchanged at $2.4891 per gallon. Natural gas fell 3 cents to finish at $3.096 per 1,000 cubic feet.

(Copyright 2011 by The Associated Press. All Rights Reserved.)

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