Oil Pares Losses after Renewed Auto Bailout Talks
Crude oil futures gained back most of the day’s losses, climbing $3 after the Bush administration said it may tap into the $700 billion rescue fund set up for banks in order to keep the auto-industry afloat.
U.S. light, sweet crude traded down $1.70, settling at $46.28 a barrel.
London Brent crude also traded lower.
The market seemed worried about demand in the beginning of the day, which sent oil prices down at the start. But after the statement from the Bush administration, the market as a whole changed its course.
Data released on Friday suggested that the recession has gotten worse. Retail sales dropped by 1.8 percent over the last month, it’s fifth consecutive decline, which is a weakness not seen for quite some time.
Wholesale prices fell 2.2 percent over the last month on cheaper fuel and energy prices.
The Commerce Department says businesses slashed inventories they were holding on shelves and back lots by 0.6 percent in October, three times the 0.2 percent decline economists expected. It was the biggest cut in inventories since August 2003.
Goldman Sachs lowered its average oil price forecast for 2009 to $45 a barrel from $80.
Bets that oil for January delivery will fall below $38 a barrel were the most active options contracts in electronic trading today in New York.