In The News

Consumption pushes oil up near $51

VIENNA — Oil prices were near $51 a barrel Thursday as upbeat reports from some U.S. retailers suggested Americans may once again be willing to increase spending.

So far this week, home decor chain Bed Bath & Beyond Inc. and restaurant Ruby Tuesday Inc. have reported better-than-expected first quarter results while teen retailer Hot Topic Inc. said same-store sales rose more than analysts' forecasts.

On Thursday, Wal-Mart Stores Inc. said same-store sales, excluding fuel, rose 1.4 percent, short of the 3.2 percent rise analysts were predicting. However, the world's largest retailer said a later Easter was to blame and that April sales are likely to be boosted by the holiday.

Same-store sales are sales at stores open at least a year and are a key measure of a retailer's health.

In other news suggesting U.S. economic weakness may be easing, Wells Fargo & Co. said Thursday that it expects record first-quarter earnings of $3 billion, easily surpassing analysts' estimates and providing an encouraging sign for corporate profits.

Benchmark crude for May delivery rose $1.61 to $50.99 a barrel by afternoon in European electronic trading on the New York Mercantile Exchange. The contract rose 23 cents on Wednesday to settle at $49.38.

Still, some traders are skeptical that the world's largest economy has turned the corner toward recovery.

"I still have to see more to convince me that the economy is turning around," said Clarence Chu, a trader at market maker Hudson Capital Energy in Singapore. "I see oil trading between $45 and $50 for a while."

U.S. crude inventory numbers were mixed. For the week ended Friday crude supplies increased by 1.7 million barrels to 361.1 million barrels, 15.2 percent above year-ago levels, the Energy Department's Energy Information Administration said in its weekly report on Wednesday.

Analysts expected a boost of 2.3 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Offshore inventory levels may be exerting a downward pull on prices.

Vienna's JBC Energy estimated that more than 30 million barrels of benchmark crude are stored on tankers in the Gulf of Mexico.

"This is nearly half of what is currently stored on tankers worldwide," said JBC in its daily newsletter.

Gasoline inventories rose by 600,000 barrels to 217.4 million barrels, 1.4 percent below year-earlier levels. Analysts expected stockpiles of the motor fuel to fall by 1.5 million barrels

"Crude inventories are still building and were in the ballpark of what was expected," Chu said.

Inventories of distillate fuel, which include diesel and heating oil, fell by 3.4 million barrels to 140.8 million barrels. Analysts expected distillate stocks to slip 600,000 barrels.

Demand for gasoline over the four weeks ended Friday was 0.2 percent lower than a year earlier, averaging about 9.1 million barrels a day.

Gasoline demand will likely increase as drivers head out on summer vacations, buoyed by oil prices that have fallen from a record $147 a barrel in July, Chu said.

"I don't expect demand will pick up dramatically given the weak economy, but gasoline is now much cheaper compared to last year."

In other Nymex trading, gasoline for May delivery rose more than 3 cents to $1.47 a gallon and heating oil gained over 2 cents to fetch $1.42 a gallon. Natural gas for May delivery was up by nearly 3 pennies at $3.66 per 1,000 cubic feet.