Although oil is down to $91.20 a barrel as of 10:53 Tuesday morning on the New York Mercantile Exchange, analysts at J.P. Morgan and Morgan Stanley are predicting a return to $100 oil in the new year.
Although oil prices fell 51 cents in light trading Monday to settle at $91 per barrel on the New York Mercantile Exchange, analysts at J.P. Morgan and Morgan Stanley are predicting a return to $100 oil in the new year.
Monday, the first day after the Christmas break, oil prices slid on China's decision over the weekend to raise its benchmark lending rate to combat rising inflation - a move likely to not only cool the country's economy but also to cut its appetite for energy, the Associated Press reports. U.S. stocks also fell in early trading after the weekend's interest rate hike, China's second attempt in three months to slow the pace of its economic growth. Inflation there reached a two-year high in November.
By 10:53 this morning, crude for February delivery had gained 20 cents. Bloomberg reports that the small change comes amid a mixed economic picture in the United States: consumer confidence unexpectedly decreased in December yet retailers had their best holiday sales in five years. Bloomberg notes that the Conference Board's confidence index fell to 52.5, less than the lowest forecast in a Bloomberg New survey of economists, while holiday sales rose 5.5 percent from Nov. 5 to Dec. 24, based on MasterCard's SpendingPulse report, which tracks payments.
Despite that prices are down so far this week, "the market is really getting limber for a sprint come January," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. World oil demand is still expected to increase in 2011, and OPEC indicated over the weekend that it wouldn't raise production.