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Monday, September 28, 2009

Oil Prices Buoyed by Strong Market, M&A Activity

By Darryl R. Isherwood

FOXBusiness

Crude oil prices jumped to nearly $67 per barrel Monday, buoyed by the stock market’s positive reaction to increased merger and acquisition activity.

The increase was welcomed by traders, who have seen crude oil flirt with the $65 mark as they weigh positive economic news against weak consumer demand. Prices plunged last week after the U.S. Department of Energy released data showing much higher than anticipated inventory.

Those inventories seemed to minimize the effect of tumult in the Middle East caused by Iran, which Sunday tested a short-range missile. Tensions are high in that region after the U.S. revealed knowledge of a secret nuclear plant, which could have the country headed for new sanctions.

"I think the Iran situation is causing some buying," said Phil Flynn, senior market analyst at PFGBest. “But I think it’s too early to tell. Really, if we cut up every drop of Iran’s oil exports it could be made up very easily by other members of the cartel. I think the real key is the Federal Reserve when they start talking about reversing some of the stimulus. I think that will be especially bearish for oil when they do.”

Oil stocks including Exxon Mobil (XOM), Chevron (CVX) and ConocoPhillips (COP) were higher in early trading.

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