Unidentified oil workers drive away from a natural gas flame burning off Sunday, March 21, 2010, in the Persian Gulf desert oil field of Sakhir, Bahrain.
(AP Photo/Hasan Jamali)
Oil prices drift higher, settle near $82
Unidentified oil workers drive away from a natural gas flame burning off Sunday, March 21, 2010, in the Persian Gulf desert oil field of Sakhir, Bahrain.
(AP Photo/Hasan Jamali)
NEW YORK—Oil prices drifted on Tuesday before closing higher, as rising stock prices waged a tug-of-war with the stronger dollar and signs of lackluster energy demand.
Benchmark crude for May delivery reversed earlier losses and gained 31 cents to settle at $81.91 a barrel on the New York Mercantile Exchange.
Stocks markets rose after sales of existing homes fell less than expected in February. The report from the National Association of Realtors topped forecasts but raised concerns about the strength of the housing market recovery. Sales have fallen for three months.
Oil traders often look to stock markets as a measure of overall investor sentiment. The Dow Jones industrial average extended gains for a second day to touch a new 17-month high.
Crude prices fell as low as $80.87 as the U.S. dollar strengthened, making oil more expensive for investors with other currencies.
"Oil prices were once again just a pawn of the foreign-exchange market as the euro started the day absolutely getting crushed over the Greek debt crisis," said PFGBest analyst Phil Flynn.
"The dollar still has the potential to appreciate rather significantly and on relatively short notice, and so for the moment, we would be cautious about being long energy," said Edward Meir, senior commodity analyst at MF Global in New York.
Meanwhile, crude oil stockpiles continue to balloon. Analysts expect the Energy Department to report a 1.67 million-barrel build in reserves on Wednesday for the week ended March 19, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
Gasoline demand remains weak. The Federal Highway Administration reported that vehicle miles traveled in January fell 1.6 percent, or by 3.7 billion vehicle miles, compared with the same month last year.
"The drop was the biggest year-on-year decline in any month since January 2009," said Tradition Energy analyst Addison Armstrong. The biggest drop-off in driving came in the West and the South.
Nationwide average retail gas prices fell 4 cents at $2.816 per gallon. Prices are up 17.4 cents in the past month and up 86 cents in the past year, according to AAA, Wright Express and Oil Price Information Service.
In other Nymex trading in April contracts, heating oil rose 1.81 cents to settle at $2.1018 a gallon, and gasoline added 0.66 cent to close at $2.2628 a gallon. Natural gas gained 5.1 cents to settle at $4.13 per 1,000 cubic feet.
In London, Brent crude rose 16 cents to settle at $80.70 on the ICE futures exchange.
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Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.
(This version CORRECTS crude settlement.)
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