11.29.06

U.S. Economy: Home Sales Drop, Stockpiles Increase
The U.S. economy may head into 2007 in weaker-than-expected shape after reports showed October new-home sales fell for the first time in three months and stockpiles at companies jumped last quarter.

Purchases of dwellings declined 3.2 percent to an annual pace of 1.004 million from a 1.037 million rate in September that was slower than previously reported, the Commerce Department said in Washington. Rising inventories were responsible for an upward revision in economic growth to 2.2 percent last quarter, the department also reported.

The numbers show few signs of the scenario sketched by Federal Reserve Chairman Ben S. Bernanke, who predicted yesterday that growth will pick up in the coming year and that inflation remains a greater threat than a slackening expansion. The Fed said today that most of its districts "reported moderate growth" in October and early November.

"It's not very promising for next year,"' said Chris Low, chief economist at FTN Financial in New York. "The damage we've already seen in housing will spread to further weakness in the economy."

11.29.06

Oil Surges Above $62 on Declining Fuel Supplies, Cold Weather
Crude oil rose above $62 a barrel in New York, the highest close in two months, after a report showed that U.S. heating-oil supplies fell as below-normal temperatures moved into the eastern U.S., indicating an increase in fuel use.

Heating-oil inventories fell 1.06 million barrels to 59.1 million last week, leaving stockpiles the lowest since August, the Energy Department said. Crude oil and gasoline inventories also declined, the report showed. The Northeast is forecast to be hit by a cold-weather system next week. The region uses 80 percent of U.S. heating oil.

"This isn't one of those mixed reports with a build in one category and a draw in others," said Tim Evans, an energy analyst at Citigroup Global Markets Inc. in New York. "This report paints a consistent picture with declines across the board."

Crude oil for January delivery rose $1.48, or 2.4 percent, to $62.47 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices are set to settle at the highest since Sept. 29. Futures touched $62.52, the highest intraday price since Oct. 2. Oil is up 11 percent from a year ago.