Oil Ends Above $94 as Traders Debate Signals

Oil ended up Monday following a day of choppy trading, as traders weighed the possibility of an economic slowdown and OPEC production hikes against the potential for surprise U.S. inventory drops or an overseas supply disruption during the long Thanksgiving holiday weekend.

Oil Refinery
Oil Refinery

U.S. light, sweet crude for January delivery rose 80 cents, or 0.9 percent, ending at $94.64 on the New York Mercantile Exchange Monday.

Traders were concerned about the economy, analysts said, given Goldman Sachs' downgrade on Monday of large banks and its estimate that Citigroup would have to write down $15 billion over upcoming quarters, due to Citi's exposure to risky debt.

In London, January Brent crude was flat on the ICE Futures exchange.

Energy investors have long worried that the problems in the subprime mortgage industry would widen, hurting the general economy and reducing demand for oil and gasoline.

The possibility that the Organization of Petroleum Exporting Countries will agree at a meeting next month to increase production also depressed prices, analysts said. OPEC heads of state held a summit meeting over the weekend in Saudi Arabia but made no decision on production. Recent statements from Saudi Arabia's oil minister suggest the cartel may boost production to bring oil prices down.

Data released Friday that showed speculative buying of oil futures fell sharply last week also contributed to Monday's declines.

"After holding long positions for a long time, many traders apparently no longer are sure that crude oil prices are still in a bullish trend," wrote Peter Beutel, president of U.S. energy risk management firm Cameron Hanover, in a research note.

Countering those concerns was the possibility that the Energy Department will report Wednesday that oil inventories fell last week or that conflict will escalate in the Middle East or another oil producing nation over the Thanksgiving holiday weekend. The Nymex will be closed on Thursday and close early on Friday.

Other energy futures were mixed Monday. Gasoline for December delivery fell 0.34 cent to $2.372 a gallon.

Heating oil futures rose 0.69 cent to $2.594 a gallon.

Natural gas for December fell 13.5 cents to $7.866 per 1,000 cubic feet.

Gasoline Prices Ease

Gas prices fell at the pump over the weekend, following the path of crude oil.

Motorists got some relief as gas fell 1.4 cents over the weekend to a national average of $3.095 a gallon, according to AAA and the Oil Price Information Service. Prices peaked at $3.112 a gallon last Thursday, and appear unlikely to rise the additional 10 to 15 cents many had predicted while oil appeared to marching relentlessly toward $100 a barrel.