Crude futures settled higher Tuesday on equity gains and dollar weakness after slipping earlier in the day on comments from US Federal Reserve Chairman Ben Bernanke, which gave no hint of another round of quantitative easing.
NYMEX August crude futures settled 79 cents higher at $89.22/barrel. The contract sank to a session low of $87.41/b in morning trade as Bernanke gave a semi-annual report to Congress, which some analysts said failed to lay the groundwork for more policy.
ICE September Brent settled 63 cents higher at $104/b. NYMEX August heating oil settled 1.45 cents higher at $2.8422/gal, while August RBOB settled 97 points lower at $2.8450/gal.
"I think that the market will continue to think of all the Bernanke or Fed talk as going to fall short of market expectations," said Carl Larry of Oil Outlooks. "Everyone wants to hear 'Yes we can!' about QE3 and until they put it into action, hopes will continue to be dashed."
Bernanke said the Federal Open Market Committee is prepared to take further action as appropriate, but offered no hints, and also noted that economic uncertainty is increasing.
He said the reduction in unemployment will be "frustrating slow," while noting there have been modest signs of improvement in the housing market.
Still, as Bernanke's testimony continued, oil futures rebounded as equities turned higher and the US dollar declined.
Matt Smith, commodity analyst at Summit Energy, said after hours of Bernanke's testimony, the market latched onto a "tidbit of rhetoric" about the possibility of further steps to stimulate the economy, even though the Fed chairman did not elaborate.
Tom Pawlicki, director of market research at EOX Live, noted that the the market rallied despite Bernanke's failure to deliver on a third round of quantitative easing.
"[The Fed] left more of the action to Congress and will look more toward an economy that will build on itself rather than quick fixes," Pawlicki said.
