Oil rallies above $50

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NEW YORK (CNNMoney.com) -- Oil prices followed the stock market higher Thursday after Wells Fargo released a bright earnings outlook.

The San Francisco-based bank predicted a much better-than-expected net income of about $3 billion for the first quarter.

Crude investors cheered the stock market's reaction, sending oil prices up $2.86, or 5.8%, to settle at $52.24 Thursday. Prices reached a high of $52.45 and a low of $49.72 earlier in the session.

The oil market has tended to follow the stocks lately, as crude investors look to the broader markets to try to gauge when fuel demand will rebound.

"If we look at the trends over the last few weeks, equities and commodities have generally moved in sync," said Rachel Ziemba, analyst at RGE Monitor. "Oil investors are looking for any optimism they can find."

Oil prices have plummeted from a record high of $147.27 a barrel last summer, as consumers have cut back on energy use amid soaring unemployment and remaining uncertainty about when the U.S. economy will recover.

As a result, the U.S. has a glut of oil supply. A weekly government inventory report said Wednesday that crude stocks increased by 1.7 million barrels last week.

OPEC: In response to those growing stockpiles, the Organization of Petroleum Exporting Countries - whose members produce about 40% of the world's crude - has been pressured to boost 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.

The OPEC cuts have gained better compliance in recent weeks, Ziemba said, placing upward pressure on oil prices despite the weak demand.

"Given the bad demand, $50 is too high a range to stabilize at," she said. "With the larger economic picture looming, I expect oil will average in the low $40s this year."

Gasoline: The national average price for a gallon of regular unleaded gasoline increased to $2.051, up from the previous day's price of $2.047, according to motorist group AAA.

That's a decline of $2.063, or 50.1%, from the record-high price of $4.114 that AAA reported on July 17, 2008.