Oil stages late session recovery
Prices recover, ending at $46.47 a barrel after falling near $41 a barrel as oil prices track a volatile stock market.
 |
| Click the chart to track the latest commodity prices. |
NEW YORK (CNNMoney.com) -- Oil prices settled higher Friday as a late session rally, sparked by rebounding equities, capped a volatile trading day.
Oil ended the session up $2.80 to settle at $46.47 a barrel. Earlier in the session crude had traded as low as $41.40 a barrel.
Oil investors were taking their queues from the stock market Friday. The Dow Jones industrial average rebounded above the 8000 point benchmark from a low of 7909 earlier in the day.
Also the tech laden Nasdaq rose as investors began buying battered tech stocks following Google's (GOOG, Fortune 500) better-than-expected results late Thursday.
"Oil is piggybacking on the strength we're seeing in the equities markets," said energy analyst Stephen Schork, publisher of trading newsletter The Schork Report.
But according to Mark Waggoner, president of brokerage Excel Futures in Huntington Beach, Calif. consumers feeling much more confident that the economy will turn around soon due to the Obama administration's stimulus plan also helped the market to recover.
"People are buying because they feel better about what's happening," he said. "We believe that the current administration is going to have some kind of stimulus package that's going to be beneficial to the markets."
In order to tackle the growing economic problem, the Obama administration has been pushing an economic stimulus package valued at about $825 billion. The stimulus package is just one part of a three-pronged approach, the administration said Thursday.
Phil Flynn, senior market analyst with Alaron Trading in Chicago, was less enthusiastic about an oil comeback.
"Obviously the combination of the huge supplies and the deteriorating jobs picture is bearish for oil," said Flynn.
Oil prices fell sharply in the morning as stocks sank after General Electric Co. reported awful results.
Industrial giant General Electric (GE, Fortune 500) reported a 47% decline in quarterly earnings Friday. And tech giant Microsoft Corp. (MSFT, Fortune 500) reported an 11% decline in earnings and drastic job cuts the previous morning.
Companies continue to cut costs across the board, signaling that the recessionary climate that caused oil demand to plummet from a record high of $147.27 a barrel in the latter half of last year continues to weigh on the market.
Deteriorating economic conditions have led to a reduction of energy demand.
Excess supplies of crude oil spiked up by 6.1 million barrels in the week ended Jan. 16, while supplies of gasoline grew by 6.5 million barrels. Analysts were expecting both crude and gas stocks to have grown by only 1.9 million barrels last week, according to a survey by energy research firm Platts.
Consumers drove 112 billion fewer miles during the 13-month period between November 1, 2007 and November 30, 2008, the Transportation Department said Thursday.
Meanwhile, the price of gasoline at the pump held steady at a national average of $1.85 a gallon Friday, according to a daily poll by motorist group AAA.
However, as oil prices have fallen, and producers cut production to keep them in check over the past several months, the market may end up undersupplied should the economy recover and demand return, according to Flynn. 
