Oil rebounds after 9-day drop
NEW YORK -- Oil prices rose sharply Tuesday for the first time in nine days with OPEC predicting energy demand will rebound faster than it had thought.
Benchmark crude for January delivery increased $1.18 to $70.69 a barrel on the New York Mercantile Exchange. In London, Brent crude for January delivery rose 52 cents to $72.41 a barrel on the ICE Futures exchange.
Prices headed upward just after the Organization of Petroleum Exporting Countries said it expected the world would consume 70,000 barrels more crude next year than previous estimates.
The 12-nation group, which supplies about 35 percent of the world's crude, said developing nations would drive demand higher.
The International Energy Agency in Paris also said recently that demand was rebounding.
Oil prices have slumped all month, falling below two-month lows on doubts about how much energy would be consumed during an extended recession.
And there are still enormous amounts of natural gas, heating oil, gasoline, and other fuels in storage.
"Oil was looking for an excuse to rally, and they got it with the OPEC report," analyst Phil Flynn said. "But the market is ignoring the fact that we have an oversupply of everything."
For most of the year, the U.S. only sipped at its energy reserves, cramming surplus crude and petroleum products into storage. With such a large stockpile at home, and more waiting overseas on idled oil tankers, Flynn said it's hard to justify rising crude prices.
But that has been the story all year.
Oil prices had doubled from March to October as investors pumped money into crude futures as a hedge against inflation. Prices did decline from a 2009 high of $82 a barrel, but largely because the dollar has bounced back. The price of crude and the dollar often move in opposite directions, with investors playing one of the other.
On Tuesday, both the dollar and the price of crude rose.
In other Nymex trading in January contracts, heating oil added 1.96 cents to $1.9278 a gallon while gasoline added 3.04 cents to $1.8571 a gallon. Natural gas rose 11.2 cents to $5.444 per 1,000 cubic feet.