Crude Oil Ends Higher On Demand Growth Prospects

(RTTNews) - U.S. crude oil ended sharply higher Tuesday, after some better than expected upbeat consumer confidence data from the U.S. lifted demand growth prospects for oil, notwithstanding some sluggish durable goods numbers and the outcome of the two-day Federal Reserve policy meet.

Investors also await the official weekly oil supply data due Wednesday, with crude inventories expected to show an increase, amid speculation that distillate inventories would drop as consumers burn up more heating oil during the ongoing cold front.

In some encouraging economic news, consumer confidence in the U.S. improved for a second consecutive month, with the index rising more than expected in January, a Conference Board report showed Tuesday.

New orders for U.S. manufactured durable goods unexpectedly dropped in December, with orders for transportation equipment showing a substantial decrease, the Commerce Department said. Meanwhile, home prices in major U.S. metropolitan areas rose slightly more than expected in November, a report released by Standard & Poor's said Tuesday.

Light Sweet Crude Oil futures for March delivery, the most actively traded contract, jumped $1.69 or 1.8 percent to close at $97.41 a barrel on the New York Mercantile Exchange Tuesday.

Crude prices for March delivery scaled a high of $97.66 a barrel intraday and a low of $95.63.

Yesterday, oil settled lower after some soft economic data from the U.S. that showed new home sales to have dropped more than expected in December, ahead of the two-day U.S. Federal Reserve policy meet. Investors also weighed the impact of the weekly U.S. inventory data due later this week.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.61 on Tuesday up from its previous close of 80.50 late Monday in North American trade. The dollar scaled a high of 80.76 intraday and a low of 80.39.

The euro traded lower against the dollar at $1.3661 on Tuesday, as compared to its previous close of $1.3673 late Monday in North America. The euro scaled a high of $1.3688 intraday and a low of $1.3630.

In economic news from the U.S, the Commerce Department said durable goods orders tumbled by 4.3 percent in December following a revised 2.6 percent increase in November. The drop in orders came as a surprise to economists, who had expected orders to increase by about 1.8 percent compared to the 3.4 percent growth that had been reported for the previous month.

Consumer confidence in the U.S. improved for the second consecutive month in January, with the index climbing to 80.7 in January from a downwardly revised 77.5 in December, rising more than expected, a report from the Conference Board showed Tuesday. Economists expected the index to edge up to 79.0 from the 78.1 originally reported for the previous month.

Home prices in major U.S. metropolitan areas rose slightly more than expected in November, a report from Standard & Poor's showed Tuesday. The S&P/Case-Shiller 20-City Composite Home Price Index rose 0.9 percent on a seasonally adjusted basis in November compared to a 1.1 percent increase in October. Economist expected the index to increase by 0.8 percent.

However, on a non-seasonally adjusted basis, the 20-City Composite Home Price Index edged down 0.1 percent in November after inching up 0.2 percent in the previous month.

From the eurozone, Germany's import prices dropped for a twelfth successive month in December, but at a weaker rate than in the previous month, data from the Federal Statistical Office revealed. The import price index dropped 2.3 percent in December from the corresponding month of 2012. This followed a 2.9 percent fall in November. Prices have now fallen regularly since December 2012. Economists had forecast a slower decline of 2.2 percent for December 2013.

Elsewhere, the U.K. economy expanded as expected by economists in the fourth quarter, but the rate of expansion slowed marginally, preliminary estimate from the Office for National Statistics showed. Gross domestic product grew 0.7 percent from the prior quarter, when it grew 0.8 percent. The fourth quarter rate matched economists' expectations.