NEW YORK ( TheStreet) -- Oil prices were poised to cross the psychologically significant $100 mark Friday as the market regained confidence in Europe's ability to rein in its debt crisis.
West Texas Intermediate (WTI) light sweet crude oil for December delivery was rising 74 cents to $98.52 a barrel as market outlook brightened on several strong macroeconomic issues. Italy's Senate approved austerity measures. It appears likely that Mario Monti will replace Silvio Berlusconi as Italy's next prime minister. Economist Lucas Papademos was sworn in as the head of Greece's new unity government. The belief that the European Central Bank will continue to try to convince the markets that they have the ability to prop up the capital markets from European country to country. Finally, the University of Michigan's reading on U.S. consumer sentiment rose to 64.2 in November from 60.9 the month before, beating the consensus estimate of 61.5, according to a poll of economists by Reuters.
January Brent crude futures were up 34 cents to $112.87. "I think we are likely to test and break $100 in the near-term, given the progress being made in Europe -- and the optimism it is spurring -- and the tightening fundamentals we are seeing in the global oil market," says commodity analyst Matt Smith of Schneider Electric's Summit Energy. "$100 is psychological in the same way that everyone looks at 10,000 on the Dow or at a $5 Footlong at Subway. It is a certain level which signifies a key threshold -- where general consensus believes there is market strength or a cheap sandwich on offer." WeatherBELL Analytics' energy analyst Alan Lammey says from a technical perspective, if WTI oil prices manage to close above $99.56 for two straight sessions, they could jump to $103.40 thereafter. "All the geopolitical turmoil, further weakness in the U.S. dollar, and this equities market illogics could break oil above $100 very soon," said Lammey, noting oil prices' march higher despite the longer-term bearish economic indicators. "Given the current backwardation in the WTI futures curve, we are expecting oil to move above $100 as early as next week, with the upside target being $104.60 -- which is the recent high from May of this year," adds Tradition Energy analyst Addison Armstrong. Backwardation occurs when futures prices are lower for distant delivery months compared with prices in nearer upcoming months. Backwardation can reflect tight supply conditions. Kingsview Financial analyst Matt Zeman agrees that the key is the consecutive close of WTI above the roughly $100 mark. Although analysts generally believe that WTI could soon advance beyond $100, they caution that the prices could just as easily backpedal from those higher levels later. "We aren't out of the woods by any means in terms of a global recovery, and I expect we will see continued volatility to push prices back into the double digits once again," Smith warned. Energy stocks were mostly advancing. EOG Resources ( EOG) was gaining 2.6% to $102.65; Triangle Petroleum ( TPLM) was jumping 6.4% to $5.69; Apache ( APA) was adding 2.2% to $103.79; Anadarko Petroleum ( APC) was gaining 2.7% to $81.64; BP ( BP) was advancing 2.5% to $44.17; Southern Union ( SUG) was flat at $42.10; and Chesapeake Energy ( CHK) was rising 1.3% to $25.87. -- Written by Andrea Tse in New York. >To contact the writer of this article, click here: Andrea Tse.