Oil rises to 3-week high

oiltop.pngOil prices rose to a 3-week high near $78 a barrel, but analysts say prices won't break above $80 a barrel until the U.S. economy turns around. By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- Oil rose to its highest level in three weeks, nearing $78 a barrel, as signs of growing Chinese demand for energy and a cheerier Wall Street boosted prices.

Crude for August delivery rose 0.7% Monday and climbed 1.2% Tuesday to finish at the highest level since June 28, at $77.44 a barrel. But prices drifted 19 cents lower on Wednesday. The rise tracked gains in the stock market, as investors welcomed better-than-expected company earnings.

A report Tuesday, from the International Energy Agency said that China overtook the U.S. as the world's biggest energy user last year, and prospects for continued growth and rising energy demand are strong.

"Everyone has been so concerned about the U.S. economy, but the report on Chinese demand opened up traders' eyes to the idea that we shouldn't worry about every piece of economic data from the U.S., but instead take a global view," said James Cordier, president of Liberty Trading Group.

Oil futures, which switched to the September contract Wednesday, continued to climb for a third straight session early Wednesday, crossing $78 a barrel. But prices slipped later in the day, after a government report showed a surprise build in crude inventories. Still, they held above $77 a barrel.

The Energy Information Administration reported that crude stocks climbed by 400,000 barrels last week, surprising analysts who were expecting inventories to fall by 1.6 million barrels, according to a consensus estimate collected by energy information provider Platts.

Gasoline inventories and distillates, used to make heating oil and gas, also rose more than expected.

A stronger dollar also weighed on prices Wednesday. Crude oil, like other commodities, is priced in dollars, and a stronger greenback pressures prices.

Despite the recent run, Cordier expects oil prices to remain between $70 and $80 a barrel, where they have been trading since May.

"The global economy is strong enough to support prices above $70, but without the U.S. economy turning around -- stocks sustaining a rally and unemployment coming down -- oil prices won't be able to break through $80 a barrel," he said. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.29%4.30%
15 yr fixed3.23%3.29%
5/1 ARM3.33%3.45%
30 yr refi4.26%4.27%
15 yr refi3.20%3.26%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 16,912.11 -70.48 -0.42%
Nasdaq 4,442.70 -2.21 -0.05%
S&P 500 1,969.95 -8.96 -0.45%
Treasuries 2.46 -0.03 -1.16%
Data as of 7:53am ET
Company Price Change % Change
Frontier Communicati... 6.79 0.85 14.31%
Windstream Holdings ... 11.83 1.30 12.35%
AT&T Inc 36.59 0.94 2.64%
CenturyLink Inc 39.90 2.19 5.81%
Bank of America Corp... 15.34 -0.16 -1.03%
Data as of Jul 29

Sections

McDonald's in Japan says profit and sales will fall short of expected targets this year, as fallout widens over a major food safety scandal. More

Amgen is the latest to continue corporate America's cost cutting strategy, even as the economy is supposedly on the mend More

Bunch o Balloons allows multiple water balloons to be filled at once. Parents are loving it -- to the tune of $645,000. More

Steve Mason, a pastor from California, inherited more than $100,000 in student loan debt when his 27-year-old daughter died suddenly in 2009. With interest and late penalties, the debt has since ballooned to $200,000. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.