NYMEX Light oil price up two precent as stocks gain

After sliding about 8% last week, light oil prices ticked back near $67 Monday, tracking a rise in equities. NYMEX Light cude oil futures for November delivery rose 82 cents and settled at $66.84. In midday trading, prices topped $67, rising 2%.

“The main catalyst supporting energy prices is the stock market,” said Liberty Trading Group President James Cordier. “We’re getting a nice rally after last week’s selling.” The S&P 500 fell more than 2% last week, its biggest selloff in nearly three months. But investors delivered a spike in stock prices Monday on merger announcements.

“You also have to throw the Iranian situation in every conversation about energy,” added Cordier. Iran revealed the existence of a second uranium enrichment facility last week, prompting President Obama and leaders of Britain and France to threaten further sanctions over the country’s nuclear program. The republic test-fired two types of long range missiles Monday.

“The situation has heated to a point where military action could take place at any time. Iran has said many times that being attacked would mean it would cut off access to the Strait of Hormuz,” Cordier said. “That puts a huge worry on the energy supplies coming out of that region. It’s not in Iran’s best interest, but Iran doesn’t always do what’s in its best interest.”

But without outside influences, Cordier thinks crude oil prices are headed lower, trading down near $60 in October. “Going into the fall, demand for energy is at its lowest. We’re getting a bounce today because of equities, but it’s just a rally in a bear market.”

Tags:  light oil prices, NYMEX