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Oil edges higher

By Chavon Sutton, staff reporter


NEW YORK (CNNMoney.com) -- Oil prices showed modest gains Tuesday as the latest news on the housing market helped bolster the stock market and boosted demand for oil.

What prices are doing: Crude for May delivery closed up 31 cents to $81.91 a barrel.

chart_ws_commodity_energy_oil.03(8).png
For more commodities prices, click chart

What's moving the market: Prices inched higher after a report on existing home sales helped push the stock market to new 18-month highs.

The National Association of Realtors said sales of existing homes slipped in February on a month-over-month basis. The decline wasn't as bad as economists had anticipated, helping lift sentiment.

That helped push the Dow Jones industrial average (INDU) higher in late-afternoon trading.

But gains were muted by continued uncertainty over Greece's debt woes, pushing the dollar higher against the euro. A stronger dollar makes crude, which is priced in the greenback, more expensive for foreign investors. This, in turn, puts downward pressure on demand and prices.

What analysts are saying: Despite steady upticks in the stock market, worries about global economic growth will continue to undercut support for oil in the near term, analysts say.

"We're going to be stuck in this $78 to $82 a barrel trading range for the next couple months until the market sees some definitive news on the economy," said Gianna Bern, president of Brookshire Advisory and Research, Inc.

And traders remain unwilling to place big bets ahead of a weekly inventory report from the U.S. Department of Energy due out Wednesday.

According to research firm Platts, crude inventories are expected to have risen by 1.67 million barrels last week, which implies lower demand. After several weeks of builds in inventory, another will be "bearish for the markets," said Bern.

Looking ahead: Although crude inventories are a major concern for investors looking for growing demand, many analysts are keeping a close watch on gasoline prices, which are up 45% from last March and still rising.

"Gasoline has been going gang busters. We're experiencing an earlier than normal ramp up in prices," said Bern. Higher gas prices could put pressure on consumer spending and stifle the economic recovery.

The national average price for a gallon of regular unleaded gasoline fell to $2.816, essentially flat compared to the previous day's price of $2.820, according to motorist group AAA.

Still prices are below the record high of $4.114 a gallon that AAA reported on July 17, 2008.

Investors, hoping for signs of stronger economic recovery, will keep an eye out for reports on new home sales and employment due out this week. To top of page

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