Oil Prices Surge to Three-Week High Amid Economic Recovery Confidence and Oil Spill Concerns

Crude futures continued their upward trend on Friday, reaching a three-week high, as investors regained confidence in the global economic recovery and concerns about the potential interruption of crude imports to the U.S. Gulf Coast by an oil spill kept prices elevated. The June delivery contract settled at $86.15 a barrel on the New York Mercantile Exchange, just below the 2010 settlement high of $86.84 a barrel on April 6. Brent crude on the ICE futures exchange also rose, settling 54 cents, or 0.6%, higher at $87.44 a barrel.

Key Takeaways:

Crude futures ended at a three-week high on Friday, with light, sweet crude for June delivery settling up 98 cents, or 1.2%, at $86.15 a barrel on the New York Mercantile Exchange.
The surge in oil prices was driven by restored confidence in the global economic recovery, as well as concerns about the potential interruption of crude imports to the U.S. Gulf Coast by an oil spill.
The oil spill, caused by a leaking well in the Gulf of Mexico, threatens operations at the Louisiana Offshore Oil Port (LOOP), the nation's biggest crude import facility, which could lead to a shortage of crude supplies.
High oil inventories, particularly in the U.S. Midwest, are the main factor standing in the way of even higher prices, with oil expected to be plentiful over the next couple months.
The spread between futures contracts is keeping the market from really erupting, according to Tony Rosado, a broker with GA Global Markets in New York.
Goldman Sachs Group Inc analysts noted that the mere threat of the port temporarily shutting down is already having an impact on oil prices.

Statistics:

Oil prices rose for a third session, propelled by the dollar's retreat from a one-year high against the euro hit on Wednesday.
The euro rallied after Greece accepted new austerity measures on Friday as a condition of receiving European Union and International Monetary Fund aid, with the euro recently trading at $1.3313, from a one-year low of $1.3114 on Wednesday.
The 3.2% expansion in first-quarter U.S. gross domestic product, fueled by stronger consumer spending, was slightly below the consensus forecast but still a positive indicator for future growth.
The June crude oil futures contract ended at a $2.21 discount to the July contract.

Sources:

Dow Jones Commodities News via Comtex, Apr 30, 2010.
Brian Baskin, Dow Jones Newswires; 212-416-2453; brian.baskin@dowjones.com.
Dow Jones Newswires 04-30-10 1535ET.