- The Washington Times - Tuesday, March 17, 2009

COLUMBUS, OHIO (AP) - Oil prices moved higher Tuesday to levels that some traders interpret as a sign that the worst may be over for the slumping economy.

Benchmark crude for April delivery rose $1.19 a barrel to $48.54 on the New York Mercantile Exchange. Prices fell as low as $43.62 a barrel Monday but rebounded to close up $1.10 at $47.35.

Brent crude jumped more than 7 percent, or $3.34 to sell for $47.32 a barrel on the ICE Exchange in London.

Signs of stable demand and the upcoming summer driving season “plays into the psychology of the past of couple of days that the worst is over,” said Phil Flynn of Alaron Trading.

Traders know that demand for energy is going to quit plummeting, but the question is how long will it take to restore growth, he said.

“There is still a lot of supply out there,” he said.

Crude and gasoline prices have stabilized this year compared with an extremely volatile 2008, when prices peaked at $147 a barrel over the summer, only to plunge below $33 by December.

“Just about everybody is enjoying the calmness, even OPEC,” said Jim Ritterbusch of Ritterbusch and Associates.

OPEC in recent weeks signaled that it had given up on hopes that oil would return to $75 a barrel anytime soon, a price it says is needed to pay for exploration and production. But for OPEC, anything is better than prices that for months could find no bottom.

Members of the Organization of Petroleum Exporting Countries, which produce 40 percent of the world’s crude, said Sunday they will try to stick more closely to the group’s current output quotas, rather than making more cuts.

Trading also was up ahead of Friday’s expiration of the April contract. In past months, there have been wide swings in prices heading up to expiration day, when those holding contracts would be committed to taking physical delivery of oil.

A government report on Tuesday showed that the number of new housing projects that builders broke ground on in February rose sharply, defying economists’ forecasts for yet another drop in activity.

The Commerce Department said construction of new homes and apartments jumped 22.2 percent from January to a seasonally adjusted annual rate of 583,000 units. Economists were expecting construction to drop to a pace of around 450,000 units.

Applications for building permits, considered a reliable sign of future activity, also rose in February by 3 percent to an annual rate of 547,000. Economists were expecting permits to fall to a pace of 500,000 units.

Even with February’s rare burst of activity, housing construction is down a whopping 47.3 percent from a year ago.

“It’s largely a case that it couldn’t get any worse,” Ritterbusch said.

Meanwhile, the Labor Department said wholesale prices edged up a tiny 0.1 percent in February as a big decline in food prices offset a 1.3 percent increase in energy prices, which have been rising for two months. Gasoline prices jumped 8.7 percent in February after a 15 percent surge in January.

Traders also were looking toward Wednesday when the government will release oil inventory figures that figure to show another build in crude oil stocks. Those numbers signal to oil markets whether demand is rising or falling.

Inventories in six of the last seven years have grown in the just-ended week, Peter Beutel of Cameron Hanover said in his daily report. Refined products, such as gasoline, have been drawn down in all seven years.

Prices at the pump remained flat overnight at $1.91 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. That is 5.6 cents lower than a month ago and $1.373 lower than a year ago.

In other Nymex trading, gasoline for April delivery rose 1.8 cents to $1.385 a gallon, while heating oil rose by 5.4 cents to $1.2671 a gallon. Natural gas for April delivery fell 1.6 cents to $3.834 per 1,000 cubic feet.


Associated Press writers Martin Crutsinger and Jeannine Aversa in Washington, George Jahn in Vienna, Austria, and Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.

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