Oil rises to near $50 on economic recovery hopes
NEW YORK - Despite a steady drumbeat of woeful economic news, investors continued to prop up oil prices Thursday, betting the global economy would turn around this year.
Benchmark crude for May delivery rose a penny to $49.26 a barrel on the New York Mercantile Exchange. In London, Brent prices increased $1.45 to $53.24 a barrel on the ICE Futures exchange.
"The only thing keeping oil from going on a death march is optimism from financial companies, banks, hedge funds," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.
"Sure, this is a shaky period. But if you invest in crude oil futures, when the economy finally makes its move, you'll be the beneficiary," Kloza said. "That's what they're thinking."
It may anger some to know that oil prices _ and therefore the cost of gasoline, heating oil and millions of petroleum-based products _ could be lower if not for investors who have no intention of using the crude stocks they buy.
But Kloza said investor money also helps drive new oil production and drilling operations.
Oil prices have hovered around $50 this month even though a variety of reports show the world is losing its appetite for petroleum. In the U.S., storage facilities for crude oil have been swelling since the end of February. They haven't held this much oil in almost 19 years.
Stores of natural gas also are rising. The Energy Information Administration said Thursday that U.S. natural gas inventories rose by 21 billion cubic feet for the week ended April 10. The 1.695 trillion cubic feet in storage was 23 percent above the five-year average.
Still, investors seem to have looked past the current dismal signals, instead eyeing a possible rebound in the second half.
"Demand hasn't come back yet, but the market is expecting it to turn around in the second half and grow next year," said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore.
At the pump, gas prices ticked up less than a penny to a national average of $2.052 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Gas prices are 14.2 cents a gallon higher than last month but $1.347 a gallon cheaper than a year ago.
In other Nymex trading, gasoline for May delivery rose by 1.84 cents to $1.4652 a gallon and heating oil gained 1.42 cents to $1.4152 a gallon. Natural gas for May delivery slipped 6.3 cents to $3.63 per 1,000 cubic feet.
Associated Press writers Ernest Scheyder in New York, George Jahn in Vienna, Austria and Alex Kennedy in Singapore contributed to this report.
A service of the Associated Press(AP)