Oil prices break 3-day losing streak

NEW YORK (CNNMoney.com) -- Oil prices rose Tuesday for the first time in three days as strong corporate earnings reports dampened worries over the Goldman fraud case.

What prices are doing: The contract for June crude oil delivery -- the most actively traded Tuesday -- rose 72 cents to settle at $83.85 a barrel. The May contract, which expires Tuesday, rose $2.00 to settle at $83.45 a barrel.

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Prices had meandered within a tight range for weeks before the fraud charges against Goldman Sachs helped send them down 3% on Friday.

Although prices were down more than 1% in the past week, to their lowest levels since early March, crude prices were still 60% higher than a year ago.

What's moving the market: Late Tuesday, a published report said the SEC's vote to charge Goldman Sachs (GS, Fortune 500) was split, seemingly along party lines, and signaled that the case may not be as strong as many in the industry feared.

The Goldman scandal spooked the stock markets Friday, sending the Dow Jones industrial average (INDU) down by triple digits. This spilled over into the oil markets as traders feared that the bank's woes could have a ripple effect on the economic recovery and dampen demand.

But U.S. stocks rebounded Monday after a round of strong earnings reports from companies such as Citigroup (C, Fortune 500) and IBM (IBM, Fortune 500) helped allay fears that Goldman's woes would overshadow the recovery. Goldman itself reported solid earnings Tuesday. Oil prices moved in tandem.

The stock market tends to be an indicator of strength or weakness in the economy, which has implications for crude oil demand.

What analysts are saying: "The Goldman news was a bit of a wet blanket for the oil markets," said Gianna Bern, president of Brookshire Advisory and Research.

Although there is no direct fundamental correlation between the stock and oil markets, Bern says that they have been moving in the same direction, as traders look for signs of a sustained economic recovery. The Goldman scandal infused uncertainty into the markets.

"Traders hate uncertainty and this was a downer for crude," she said.

But the combination of healthy earnings and the slow re-opening of European air space help boost crude oil prices, Bern said. Lufthansa and Air France were among the airlines resuming limited travel to areas east of Britain on Tuesday.

Still MF Global's Tom Pawlicki said that the potential activation of Greece's emergency aid plan, which could come at any time, as well as rising inventories could stifle gains, as traders limit buying at unjustifiably high prices.

Crude demand is still well below historical averages, according to the Energy Information Administration. And jet fuel consumption in Europe has fallen by about two-thirds after the Icelandic ash cloud grounded virtually all commercial flights for days, according to MF Global.

As a result, "we don't think oil will look attractive again until prices fall into the $78 to $80 a barrel range for June futures," said Pawlicki.

Looking ahead: Traders will be looking at the weekly crude inventory reports on Wednesday and initial jobless claims Thursday.

Analysts expect Wednesday's crude inventory report from the EIA to show a 300,000 barrel rise in crude supplies last week, according to research firm Platts. In the prior week, the government reported a surprise 2.2 million barrel dip in supplies.

They will also be keeping a close watch on new developments around the Icelandic volcanic eruption and international travel.