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Oil moves higher as tax-cut package heads to Obama
Source: Agencies |
December 18, 2010, Saturday
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OIL prices rose yesterday after Congress sent a complex tax cut extension package to US President Barack Obama, bolstering hopes that demand for energy products will strengthen in the new year.
Benchmark oil for January delivery rose 34 cents to settle at US$88.02 a barrel on the New York Mercantile Exchange.
The president is expected to sign the bill yesterday, extending tax cuts and jobless benefits. It also includes a one-year cut in Social Security taxes that would benefit nearly every worker.
The tax cuts enacted when George W. Bush was president were scheduled to expire January 1. The measure before Obama would extend them for two years. The bill also would extend a series of business tax breaks intended to encourage investment.
The tax cuts add some momentum to the oil market, as traders hope they will help stimulate the economy and create more demand for gasoline, natural gas and heating oil.
The question remains whether the overall package will provide a long-term boost for the market, because an improving economy typically helps strengthen the dollar, PFGBest analyst Phil Flynn said.
"Whether or not it's going to really be the engine revving in the market, I'm a little ... apprehensive to say that's going to happen," Tradition Energy analyst Gene McGillian said.
Since oil and other commodities are priced in dollars, a stronger dollar makes them more expensive for buyers who use the euro and other currencies.
In other Nymex trading in January contracts, heating oil fell 0.26 cent to settle at US$2.4737 a gallon, gasoline futures added 1.35 cents to settle at US$2.3178 a gallon and natural gas gained 1.8 cents to settle at US$4.066 per 1,000 cubic feet.
In London, Brent crude rose 7 cents to settle at US$91.67 a barrel on the ICE Futures exchange.
Benchmark oil for January delivery rose 34 cents to settle at US$88.02 a barrel on the New York Mercantile Exchange.
The president is expected to sign the bill yesterday, extending tax cuts and jobless benefits. It also includes a one-year cut in Social Security taxes that would benefit nearly every worker.
The tax cuts enacted when George W. Bush was president were scheduled to expire January 1. The measure before Obama would extend them for two years. The bill also would extend a series of business tax breaks intended to encourage investment.
The tax cuts add some momentum to the oil market, as traders hope they will help stimulate the economy and create more demand for gasoline, natural gas and heating oil.
The question remains whether the overall package will provide a long-term boost for the market, because an improving economy typically helps strengthen the dollar, PFGBest analyst Phil Flynn said.
"Whether or not it's going to really be the engine revving in the market, I'm a little ... apprehensive to say that's going to happen," Tradition Energy analyst Gene McGillian said.
Since oil and other commodities are priced in dollars, a stronger dollar makes them more expensive for buyers who use the euro and other currencies.
In other Nymex trading in January contracts, heating oil fell 0.26 cent to settle at US$2.4737 a gallon, gasoline futures added 1.35 cents to settle at US$2.3178 a gallon and natural gas gained 1.8 cents to settle at US$4.066 per 1,000 cubic feet.
In London, Brent crude rose 7 cents to settle at US$91.67 a barrel on the ICE Futures exchange.
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