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Oil rebounds alongside stocks to more than $69
2009-08-18
Oil prices rebounded sharply alongside the major stock indices Tuesday after a huge sell-off that began the week. The September benchmark crude contract gained $2.44 to settle at $69.19 a barrel on the New York Mercantile Exchange. With the September contract expiring on Thursday, most of the volume was in the October contract, which rose $2.28 to settle at $71.09. With so many mixed economic reports, the jump in prices surprised many experts, who watched crude fall 5 percent over the past two trading sessions. Natural gas prices fell for the ninth straight day and it has been increasingly difficult to ignore the amount of crude and gas being placed into storage. Energy Department data shows U.S. crude stocks have grown for four straight weeks and that trend is expected to continue when the government releases the latest inventory data on Wednesday. Major industries are not making products in great numbers because consumers are still skittish. That lack of demand for the energy needed to produce goods has pushed natural gas prices to seven-year lows. That could lower utility bills for millions of people, depending on state regulations and contracts signed by power providers. That's a break for consumers, who are still staying away from stores, though some retailers did better than expected this past quarter. Retailers as wide-ranging as Home Depot and Saks Inc. reported quarterly losses on Tuesday, yet company shares rose with the U.S. market. "Oil moved with the market's massive mood swing as it tried to determine just where we are in the economic recovery," said PFGBest Research analyst Phil Flynn. There are so many mixed signals about the economy, it has been difficult to predict how much energy is going to be consumed not only in 2010, but even for the remainder of this year. The Commerce Department reported Tuesday that construction of single-family homes rose 1.7 percent in July. It was the fifth straight monthly increase and the fastest pace since last October. At the same time, construction of apartment buildings slumped by 13 percent during the same period. The economic uncertainty has provided some relief at the gas pump, where prices are about where they were four years ago at this time of the year. The average price for a gallon of regular gasoline fell seven-tenths of a penny overnight to $2.634, according to auto club AAA, Wright Express and Oil Price Information Service. That's about 17 cents more than a month ago, but about $1.11 less than at this time last year. All eyes will be on weather maps to see if the first hurricane of the year threatens oil installations in the Gulf of Mexico. Hurricane Bill was a Category 2 storm with winds of 100 mph and will likely be near Bermuda by the end of the week, the U.S. National Hurricane Center said. Projections do not show the storm entering the Gulf of Mexico, where it could wreak havoc on oil and natural gas installations. In other Nymex trading, gasoline for September delivery rose 4.87 cents to settle just above $2 a gallon and heating oil gained 3.85 cents to settle at $1.865. Natural gas for September delivery fell 4.7 cents to settle at $3.115 per 1,000 cubic feet. In London, Brent prices rose $1.82 to settle at $72.37 a barrel on the ICE Futures exchange. ___ Associated Press Writers Alex Kennedy in Singapore, George Jahn in Vienna and Alan Zibel in Washington contributed to this report.
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