Oil lifted by stocks and inventory
Crude supplies grow less than expected in government's weekly report. Market follows stocks higher.
 |
| Click chart to view latest commodity prices |
NEW YORK (CNNMoney.com) -- Oil prices rose Wednesday - ending a 3-day decline - as stocks advanced and a government report showed supplies of crude increased less than expected.
In its weekly inventory report, the Energy Information Administration said crude stocks increased by 1.7 million barrels in the week ended April 3.
Analysts expected an increase of 2.3 million barrels of crude oil, according to a consensus estimate of industry analysts surveyed by Platts, a global energy information provider.
Crude prices rose 23 cents, or 0.5%, to settle at $49.38 a barrel. They reached a high of $51.30 and a low of $47.37 earlier in the session.
The EIA report especially cheered investors because the American Petroleum Institute reported a 6.9 million-barrel increase in its report Tuesday, said Chris Lafakis, analyst at Moody's Economy.com.
"The market was primed for a big increase after the API survey, but it received a pleasant surprise," Lafakis said.
Equities also boosted oil prices, as stocks opened higher Wednesday. Investors have looked to broader markets to try to gauge when fuel demand will rebound.
Major stock indexes were slightly higher as oil settled. A merger in the housing industry and a possible TARP lifeline for insurers overshadowed Alcoa's glum start to the corporate reporting period.
Amid widespread unemployment and general uncertainty about the future of the economy, consumers have scaled back their use of energy. Oil prices have plummeted from a record high of $147.27 a barrel last summer.
In response to growing stockpiles, the Organization of Petroleum Exporting Countries - whose members produce about 40% of the world's crude - has been pressured to put a floor under prices.
At an OPEC meeting March 15, the group agreed to reduce supply by a further 800,000 barrels a day to complete promised supply cuts.
Gasoline: Stockpiles of gasoline increased by 600,000 barrels, after analysts predicted a decrease of 1.5 million barrels.
The national average price for a gallon of regular unleaded gasoline increased to $2.047, up from the previous day's $2.04, according to motorist group AAA.
The average price of a gallon of gas is down 50.2% from the record high price of $4.114 in July.
The EIA report also said distillates, used to make heating oil and diesel fuel, fell by 3.4 million barrels. Analysts were looking for a decrease of 600,000 barrels.
Outlook: Oil prices should remain around $50 for the rest of the week, Lafakis said.
"This week is relatively quiet in terms of economic reports," he said.
Next week's data, including retail sales, may cause more volatility in the market, Lafakis said. He expects oil prices will rise steadily to $55.78 by the end of the year. 
