- The Washington Times - Tuesday, April 21, 2009

COLUMBUS, OHIO (AP) - Oil prices gained ground Tuesday as the stock market rose on the strength of bank stocks, even as weak corporate profits and a global oil glut signaled that the recession and soft demand for crude are not going away soon.

Benchmark crude for May delivery rose 72 cents to $46.60 a barrel on the New York Mercantile Exchange. With Nymex’s May contract expiring Tuesday, traders focused on the June contract, which gained 29 cents at $48.80 a barrel.

Monday’s decline of $4.45 a barrel tracked a broad sell-off in stock prices.

Until Monday’s share drop in crude, oil prices have traded near $50 a barrel for the last two weeks after jumping from below $35 in February as investors struggle to gauge the health of a global economy reeling from the longest recession in the U.S. since World War II.

“It’s been a fight between hope and reality,” said Addision Armstrong of Tradition Energy.

Oil had rallied along with the stock markets in hopes that an improved economy would mean more demand for crude.

Crude prices got off to a rocky start Tuesday, but improved as the stock market turned positive on the back of bank stocks, after Treasury Secretary Timothy Geithner told Congress that some banks could be allowed to repay financial bailout funds. The Dow Jones Industrial Average and the Standard & Poor’s 500 index were both up about 1 percent in afternoon trading.

“I’m calling it the Tim Geithner rally,” said Phil Flynn of Alaron Trading Corp.

Stocks lagged early in the session after a string of lackluster earnings reports and forecasts stoked worries about the economy.

Delta Air Lines and United Airlines, AK Steel, DuPont Co. and United Technologies Corp. were among companies that either reported a first quarter loss on Tuesday or said profits were down from a year ago.

“We knew the earnings would be lousy,” oil analyst and trader Stephen Schork said.

“We’re just going have to work our way through it,” he said of the glut of oil that is at storage levels last seen in 1990 after Iraq invaded Kuwait. “And we’re not going to work our way through it until we see demand for it.”

Oil opened on Monday at $50.16 and fell nearly 13 percent to $43.83 by Tuesday morning before turning around.

“Some consolidation was probably in order,” Armstrong said.

Flynn said traders have been concerned that if the economy were to improve faster than expected, supplies could tighten. They also have been worried that Federal Reserve policies could trigger inflation, which could send oil higher.

Traders are focused as well on weekly petroleum inventory data that the Energy Information Agency will release Wednesday. Analysts expect a build of 3 million barrels in crude stocks, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Prices at the pump, meanwhile, remained flat, rising 0.2 cents overnight to $2.06 a gallon, according to AAA, Wright Express and Oil Price Information Service. Prices are 10.7 cents higher than a month ago, but $1.463 lower than a year ago.

In other Nymex trading, gasoline for May delivery was up 1.28 cents at $1.4247 a gallon and heating oil added 2.34 cents at $1.3550 a gallon. Natural gas for May delivery rose 2.2 cents to $3.518 per 1,000 cubic feet.

In London, Brent prices rose 33 cents to $50.19 a barrel on the ICE Futures exchange.


Associated Press writers Pablo Gorondi in Budapest, Hungary, and Alex Kennedy in Singapore contributed to this report.

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