Oil rises as flights resume, Wall Street gains

By Daniel Wallis

NEW YORK (BestGrowthStock) – Oil prices rose on Tuesday after three sessions of losses as the threat from Iceland’s volcanic ash cloud receded, letting some European flights resume, and U.S. stocks (Read more about the stock market today. ) edged higher on quarterly results.

Oil investors have been watching Wall Street and other financial markets since last year for signs of economic recovery that would point the way to higher fuel consumption.

“Crude futures are up, tracking equities, which are a little stronger,” said Tom Knight, a trader at Truman Arnold in Texarkana, Texas. “Also, there was no technical follow-through after May crude hit a low at around $80.50 on Monday. That helped create the bounce we are seeing today.”

U.S. crude for June delivery rose 93 cents, or 1.12 percent, to settle at $84.06 per barrel in late post-settlement trade after the American Petroleum Institute (API) released its weekly data. Earlier, it had settled up 0.87 percent at $83.85.

Crude for May delivery settled up $2, or 2.46 percent, at $83.45 — after falling nearly 5 percent in the two previous sessions — in a spate of short-covering late in the contract’s last day. Trade volumes for the May contract were low, less than a tenth of the volume for June.

In London, Brent crude for June was up 80 cents at $85.03 a barrel. It had settled up 57 cents at $84.80.

The resumption of flights at some European airports also boosted the market. Analysts expected jet fuel demand to improve after it tumbled 900,000 barrels per day, a little less than a fifth of global consumption, after a volcano erupted in Iceland last week and spewed ash over much of Europe.

U.S. FUEL STOCKS DOWN

Lost jet fuel demand could add to already brimming global distillate stocks both on land and in floating storage.

“There are high stockpiles in the OECD countries and now we are getting swollen kerosene levels. There is a supply glut,” said Carsten Fritsch, a commodities analyst at Commerzbank.

U.S. refined fuel stocks posted surprise declines last week while crude oil stockpiles fell more than expected, according to weekly figures from the API trade group.

It said gasoline stocks were off 1.7 million barrels in the week to April 16, while analysts had expected a 400,000-barrel build. Stocks of middle distillate fuels, which include heating oil and diesel, dropped by a sizable 3.1 million barrels, counter to analysts’ forecasts for an 800,000-barrel gain.

Meanwhile, crude oil stockpiles in the world’s largest energy consumer were off by 741,000 barrels last week, API added, while analysts had forecast a 300,000-barrel decline.

The U.S. Energy Information Administration releases its more authoritative data on Wednesday at 10:30 a.m. EDT.

The dollar slipped as global risk appetite improved after robust first-quarter U.S. earnings led by Goldman Sachs and expectations of rate increases in Australia and Canada. (USD/: ) That made oil cheaper for buyers holding other currencies.

Goldman unveiled forecast-busting results four days after the U.S. Securities and Exchange Commission accused the world’s biggest commodity trader of duping clients with its marketing of a subprime mortgage product.

OPEC member Kuwait’s oil minister said he saw oil trading in a $75 to $90 range for the foreseeable future.

“This is … materially lower than the $100 per barrel that the same minister said a week ago would be required for OPEC to raise output,” JPMorgan Research said in a daily report.

OPEC has not changed supply targets since late 2008, when it announced record cuts to halt a slide to near $32 a barrel.

Stock Report

(Additional reporting by Gene Ramos and Robert Gibbons in New York, Emma Farge and Alex Lawler in London, Diana Elias in Kuwait and Alejandro Barbajosa in Singapore; Editing by Lisa Shumaker)

Oil rises as flights resume, Wall Street gains