The U.S. Treasury's plan to purchase toxic assets and stronger-than-expected existing home sales are helping to boost oil prices this morning, as it trades near a two-and-a-half month high.
The rally in oil prices started at 10 a.m. EDT on Monday. Prices dropped near session lows ahead of the existing home sales report and rebounded sharply following the better-than-expected data. Existing home sales rose 5.1% in February against expectations for a 0.9% decline, according to the National Association of Realtors.
The positive news helped WTI crude break through $53 per barrel, hitting session highs at $53.84. Prices remain near the session highs and are holding above the $53 mark. Prices have been on a strong uptrend since March 15 with strong support at $51.
Also helping to boost risk appetite is the latest news from the U.S. Treasury to help resolve the credit crisis. Treasury announced it would invest up to $1 trillion to purchase mortgage-backed securities and other toxic debt.
Colin Cieszynski, market analyst from CMC Markets, said rising risk appetite could suggest that underlying investor confidence is improving. He added the commodities market could also be moving higher in anticipation that global supply and demand will move back into balance.
US crude oil has broken through $53.00/bbl today, and out of a trading channel that has been in place since December. While a measured move suggests $71.00/bbl may be attainable over time, nearer term resistance looms near $60.00/bbl, he wrote.
Analysts from Citigroup said the technical indicators are pointing to further gains in oil prices. They noted that last week oil prices closed above $50 per barrel, and they believe this opens the way for $68.
WTI Crude oil is up $1.64 to $53.71 while Brent crude is trading up $2.23 to $53.45.
Meanwhile, ICE RBOB gasoline futures are up $4.25 to $149.95 and Globex natural gas is unchanged at $1.35. Heating oil at the ICE is up $0.99 to $139.33.
In the mining sector, spot gold is trading down $0.18 to $952.03 USD. In Canadian dollars, gold is down $10.34 to C$1171.53. Silver contracts at the CBOT are down $0.04 to $13.78.
Bloomberg's index for base metals is up 0.74 points to 123.36. Wheat futures at the CBOT are up $6.75 to $557.00.
All data taken at 11:37 a.m. EDT.
By Neils Christensen, email@example.com, edited by Ernest Hoffman, firstname.lastname@example.org