Oil regains ground
Prices edge higher despite a report showing world oil consumption will shrink this year at its fastest rate since the 1980s.
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| Click the chart for current oil prices. |
NEW YORK (CNNMoney.com) -- Oil prices rose modestly Thursday, recovering from earlier losses, as investors looked past a grim outlook for world oil demand to focus on Wall Street gains.
Light, sweet crude for June delivery rose 60 cents to settle at $58.62 a barrel Thursday after falling to a low of $57.10 earlier in the session.
Oil traded lower for most of the session in response to a report from the International Energy Agency that said world oil consumption will shrink this year at its fastest rate since the 1980s.
But crude regained ground near the close of trade as stocks held solid gains after several down days. The Dow was up about 0.7% with less than two hours before the closing bell.
Many oil traders view the stocks as a leading economic indicator and a barometer of future energy demand. As a result, the price of oil often rises and falls in tandem with the major stock indexes.
Crude followed stocks higher in recent sessions, briefly trading above $60 a barrel Tuesday, as investors responded to signs the economy may be stabilizing.
But those so-called green shoots were called into question following an increase in the number of people filing new claims for jobless benefits and a surprise drop in April retail sales.
Meanwhile, the market remains concerned about weak demand for oil as the global economy struggles to right itself.
World oil demand is expected to fall by 2.4 million barrels per day to 83.4 million barrels per day in 2009, according to the IEA. That's down nearly 3% from last year, when global demand averaged 85.8 million barrels per day.
"Continued oil demand weakness is premised on strong economic recovery later this year remaining elusive," the IEA said in its Oil Market Report.
The Paris-based IEA also said the recent increase in oil prices is a result of market sentiment and not a reflection of improved economic fundamentals.
"New bullish macroeconomic sentiment has not yet produced signs of oil demand recovery and oil market fundamentals remain weak," according to the report.
The IEA's outlook echoed a report from the Organization of the Petroleum Exporting Countries released Wednesday.
OPEC, whose members pump more than a third of the world's oil, said it expects world oil demand to fall by 1.6 million barrels per day in 2009 and that economic conditions do not support higher prices.
Gasoline: Motorist group AAA reported the national average price for a gallon of regular unleaded gasoline increased to $2.281, up 1.4 cents from the previous day's price of $2.267. This was the 16th straight day of increases. 
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