Rising oil prices add to higher U.S. trade deficit
— -- The trade deficit widened in March, a good sign for the economy, but oil prices topped $60 for the first time since November.
The price of light, sweet crude oil hit $60.08 in trading Tuesday, but fell back to close at $58.85, up 35 cents, on the New York Mercantile Exchange. Regular gasoline rose 2.2 cents to $2.248 a gallon. It's up 16.9 cents the past week, the American Automobile Association said.
But if you include the Strategic Petroleum Reserve, says Tom Kloza, chief oil analyst for Oil Price Information Service, the U.S. has the most oil in storage ever, meaning a summer spike is unlikely. He thinks gasoline will peak at $2.30 to $2.40 a gallon.
Most of the recent increases in oil and gasoline prices are because of optimism about the economy in the futures markets, he says. The Commerce Department added a tiny bit to that optimism Tuesday when it released its trade statistics for March.
The U.S. imported $27.6 billion more than it exported in March, vs. $26.1 billion in February, according to the Commerce Department.
It was the first increase in the trade deficit since July.
The value of both imports and exports fell, but imports fell less rapidly than they did in February — and that's the good news. Falling imports means that U.S. consumers are spending less. But because imports fell less rapidly in March than in February, economists see that as a sign that the deterioration in U.S. economic activity is slowing.
"It's consistent with some signs of improvement in the domestic economy, and shows less downward pressure in general," says Brian Bethune of IHS Global Insight.
The value of imports fell 1% to $151.2 billion, far less than the 5.1% plunge in February. Still, imports were $207.1 billion in March 2008.
One big reason for the improvement: Oil prices had jumped from less than $35 a barrel in February to more than $50 a barrel in March. The higher price means that the overall value of imports rises, even if the U.S. imports the same amount of oil.
