Crude Oil Ends Sharply Higher On OPEC Comments

(RTTNews) - U.S. crude oil snapped a three-day loss to end sharply higher on Tuesday, after the Organization of the Petroleum Exporting Countries indicated prices may have bottomed, with hopes that Saudi Arabia may step in to balance crude prices.

Markets may be oversupplied right now, but OPEC Secretary-General Abdullah al-Badri warned of a risk of a future jump to $200 a barrel if suppliers abandon investments geared toward future production. Nonetheless, he also indicated that the OPEC would likely stand by its decision to maintain current production levels.

With non-OPEC supplies seen tightening as many energy producers in the U.S. and Canada trim payrolls and delay projects, crude oil prices have steadied this week.

Crude oil also found support with the dollar trending lower against some major currencies after a couple of disappointing economic reports from the U.S.

In some soft economic news, new orders for U.S. manufactured durable goods unexpectedly showed a substantial decrease of 3.4 percent in December, a Commerce Department report showed Tuesday. The drop was partly attributed to a sharp decline in orders for transportation equipment.

Meanwhile, a report from Standard & Poor's showed annual home price growth in major metropolitan areas continued to slow in November, although in line with expectations.

On a positive note, a Commerce Department report showed new home sales in the U.S. to have jumped to its highest annual rate in over six years in December, while a Conference Board report indicated consumer confidence index at a seven-year high in January.

A two-day Federal Reserve meeting gets underway today, although the post-meeting policy statement is not expected until tomorrow. No change in policy is expected.

Light Sweet Crude Oil futures for March delivery, the most actively traded contract, jumped $1.08 or 2.4 percent, to settle at $46.23 a barrel on the New York Mercantile Exchange Tuesday.

Crude prices for March delivery scaled a high of $46.55 a barrel intraday and a low of $44.81.

On Monday, crude oil ended lower at $45.15, or $0.44 or 1.0 percent, near 6-year lows amid speculation that OPEC is determined to keep prices low in a bid to stifle competition.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.05 on Tuesday, down from its previous close of 94.93 late Monday in North American trade. The dollar scaled a high of 95.01 intraday and a low of 93.70.

The euro trended higher against the dollar at $1.1367 on Tuesday, as compared to its previous close of $1.1239 late Monday in North American trade. The euro scaled a high of $1.1424 intraday and a low of $1.1225.

On the economic front, a Commerce Department report showed durable goods orders tumbled 3.4 percent in December following a revised 2.1 percent decrease in November. Economists expected orders to increase by 0.5 percent compared to the 0.7 percent drop originally reported for the previous month.

Separately, a report from the Commerce Department showed U.S. new home sales rebounded more than anticipated in December, after having reported an unexpected sales drop in the previous month. New home sales jumped 11.6 percent to an annual rate of 481,000 in December from the revised November rate of 431,000. Economists expected new home sales to climb to a rate of 452,000 from the 438,000 originally reported for the previous month.

A report from Standard & Poor's on Tuesday showed annual home price growth in major metropolitan areas continued to slow in November. The S&P/Case-Shiller 20-City Composite Home Price Index showed annual rate of growth to have slowed to 4.3 percent in November from 4.5 percent in October, but in line with economists' estimates.

Consumer confidence in the U.S. has seen a substantial improvement in the month of January, a report from the Conference Board revealed Tuesday, with the consumer confidence index jumping to its highest level in over seven years. The Board's consumer confidence index surged to 102.9 in January from an upwardly revised 93.1 in December. Economists expected the index at 96.0 from the 92.6 originally reported in the previous month.

From Asia, China's leading economic index continued to improve in December, data from the Conference Board showed Tuesday. The leading index gained 1.1 percent in December, following a 0.8 percent rise in November and a 0.9 percent increase in October. The index signals turning points in the economic cycles. Five of the six components contributed positively to the index in December.

From Europe, economic growth in the U.K. slowed more than expected in the fourth quarter due to weakness in the production and construction sectors. Nevertheless, the economy logged its strongest growth in seven years in 2014 as a whole, preliminary data from the Office for National Statistics showed Tuesday.

U.K. gross domestic product grew 0.5 percent sequentially, slower than the 0.7 percent expansion seen in the third quarter and a 0.6 percent rise forecast by economists. This was the slowest growth in a year but marked the eighth straight quarter of expansion.