New York, August 10: Oil prices climbed above USD 71 a barrel today ahead of this week’s US consumer spending data that could shed light on the strength of the economic recovery.
Benchmark crude for September delivery gained 48 cents to USD 71.41 a barrel on the New York Mercantile Exchange.
The government this week will report July retail sales, and Wal-Mart Stores Inc and Macy’s Inc will announce their second quarter results.
Friday’s news that the US unemployment rate fell to 9.4 per cent in June sent stock markets surging, but crude prices still fell USD 1.01 to USD 70.93.
A strengthening economy prompts consumers and businesses to spend more on energy, but oil has also been a beneficiary of Federal Reserve “quantitative easing” policies that push interest rates lower by adding more money to the financial system, said Alaron Trading Corp analyst Phil Flynn.
If the economy gets too good, the Fed might have to start taking away some of the stimulus, which would remove many of the reasons why money has flooded into energy markets, Flynn said.
The Fed plans to meet on Tuesday and Wednesday to discuss “whether to send a signal to the marketplace that it’s time to start cutting back on the punch before they take the entire bowl away,” Flynn said in his morning report.
—Agencies