Oil off highs after push above $60
Signs of economic stabilization and a weak dollar boost early trading, but crude pares gains on demand concerns.
NEW YORK (CNNMoney.com) -- Oil prices held their gains Tuesday, after climbing to a six-month high, as investors weighed signs of economic stabilization against weak energy demand and record-high crude inventories.
Light, sweet crude for June delivery rose 35 cents to settle at $58.85 a barrel after climbing to $60.08 a barrel in pre-market, electronic trading.
It was the first time oil traded above $60 a barrel since Nov. 11 when it hit an intra-day high of $60.80. Oil last settled above $60 on Nov. 10, when it ended at $62.41.
The advance came as the dollar fell sharply against rival currencies. The price of oil often rises when the greenback falls because crude is priced in dollars around the world.
But the rally faded as investors remain concerned about the poor fundamental backdrop for the oil market, which has driven the price of crude down from last summer's all-time high of $147 a barrel.
In its monthly short-term energy outlook, the Energy Information Administration lowered its outlook for 2009 world oil consumption by 1.8 million barrels per day to 83.67 million. That's 400,000 more than last month's projection.
"World oil consumption remains weak because of the global economic downturn," the report said.
As demand has withered, U.S. crude supplies have risen to their highest levels since 1990 and analysts expect another 1.4 million barrel expansion when the EIA releases its weekly inventory report Wednesday.
The market was supported Tuesday by a report that showed Chinese investment spending surged in April, including a big advance in spending on transport. But the report also showed a larger-than-expected drop in exports, which does not bode well for China's export-driven economy.
Meanwhile, stocks were lower in choppy trading on the New York Stock Exchange. Asian markets fell and European shares were mixed in active trading.
Many oil traders view the stock market as a leading economic indicator and a barometer of future oil demand. As a result, the price of oil often rises and falls with the major stock indexes.
Gas: Retail gas prices rose for the 14th day in a row, according to a survey by motorist group AAA.
The national average price for a gallon of regular gasoline rose 2.2 cents overnight to $2.248. Over the past 14 days, gas prices have increased 20 cents.
Separately, AAA said it expects Memorial Day travel to rebound after a sharp drop last year. The motorist group also said it expects gas prices to stay below an average $2.50 a gallon this summer.