In spite of a surge in oil prices and a mixed batch of company earnings early in the session, Wall Street stocks closed higher yesterday, as the market responded positively to the US Federal Reserveâs decision to keep its target for the federal funds rate at 5.25 %, earnings are going to be critical as a slowing economy is not going to lift all boats. The stock market and bond market have been pricing in the assumption that the economy is going to slow to a sustainable rate and inflation is going to continue to decline, Energy shares led the rally as crude oil rose the most in seven months. ConocoPhillips, the third-largest U.S. oil company, exceeded analysts' estimates. An industry report showed that the housing market continues to cool, driving the economic slowdown. According to the market research in US it showed home resaleâs fell 1.9 % in September to the lowest level in almost three years.
Oil eased, but held above $61 on Thursday after a surprise drop in U.S. crude stocks and mounting evidence of OPEC cuts triggered the biggest one-day gain in seven months the previous session. U.S light crude was down 11 cents at $61.29 a barrel, after a 3.5 percent surge the day before, the market's sharpest one-day gain in seven months. London Brent crude was down 38 cents at $61.67 a barrel. U.S. prices spiked to $61.65 on Wednesday, their highest since Oct. 2, after U.S. data showed crude stocks in the world's top consumer fell last week. The market had expected them to rise. The drop in crude inventories followed the closure of the Louisiana Offshore Oil Port, the country's biggest oil import facility, for three days last week. Christopher Bellew, a broker at Bache Financial in London, said inventory levels were very comfortable, in spite of the unexpected fall. If, however, the Organization of the Petroleum Exporting Countries (OPEC) honors its commitment made last week to reduce output by 1.2 million barrels per day, inventory levels would decline more significantly. Traders have questioned OPEC's ability to enforce output discipline, but increasing evidence of the producer group's determination to prop up prices has helped the market to recover from a 2006 low of $56.55 a barrel for U.S. crude hit last week. Leading OPEC member Saudi Arabia and the second biggest OPEC producer Iran have informed their customers of reduced November supplies, as has the United Arab Emirates. In addition, Nigeria will extend the 5 percent curbs it imposed voluntarily this month, a Nigerian official said on Wednesday. Weather forecast Meteorlogix has forecast below normal temperatures over the next three to five days.