Oil climbs above $34 on mortgage reports
Reports that the U.S. government may subsidize mortgage payments boosted prices above $34 a barrel Friday after investor skepticism about the U.S. stimulus package pulled prices near record lows.
Light, sweet crude for March delivery rose 47 cents to $34.45 a barrel by midday in Europe on the New York Mercantile Exchange. The contract fell $1.96 overnight to settle at $33.98 a barrel.
Still, prices are not that far from their five-year low at $33.20 a barrel in December, down from from a record $147.27 in July.
Oil prices found support after investors seemed to take heart on reports the government may subsidize mortgage payments for troubled homeowners and offer some kind of boost to the troubled U.S. economy, the world’s biggest consumer of oil.
The idea of targeted help for homeowners impressed investors more than the government’s $789 billion economic stimulus package and its revised plan to bail out problem banks.
A surprise jump in U.S. retail sales for January also offered a glimmer of hope about the world’s largest economy though other data painted a less optimistic picture.
Despite the slight improvement in oil prices, investors are worried that the worst U.S. recession in decades could be deepening, and taking demand for crude down with it. Job losses are a particular concern as unemployment drags on consumer spending.