MW: Oil reduces gains as stocks fall after mixed home data
Crude-oil futures reduced their earlier gains Wednesday after a mixed round of U.S. housing data which also pressured stocks.
Crude for July delivery was last up 10 cents, or 0.1%, at $62.56 a barrel in electronic trading. It was up more than 1% earlier.
U.S. home prices dropped 0.5% in the first quarter of the year, marking a much smaller pace of decline than the previous quarter, the Federal Housing Finance Agency reported Wednesday.
In equity trading, the Dow Jones Industrial Average fell 0.2% to 8,453 points.
"Oil is following stocks again," said Phil Flynn, vice president at futures trading firm Alaron Trading. "It seems that the market is still hypnotized with the allure of outside markets."
Rounding out the early energy trading, June-reformulated gasoline rose 2.6 cents, or 0.1%, to $1.855 a gallon, and June heating oil fell slightly to $1.5437 a gallon.
Natural gas for June delivery fell 5.2 cents, or 1.5% to $3.484 per million British thermal units.
In oil exchange-traded funds, the United States Oil Fund (USO 34.33, +0.22, +0.65%) gained 0.4% to $34.24.In energy equities, the Amex Oil Index (XOI 951.44, +2.97, +0.31%) rose slightly to 948.76.
Earlier rally
Crude had topped $63 a barrel earlier for the first time in more than six months after Saudi Arabian Oil Minister expressed his optimism on economic recovery.
The recent rise in oil prices was a "function of optimism" over early signs of a global economic recovery, said Ali Naimi ahead of an Organization of Petroleum Exporting Countries summit scheduled for Thursday in Vienna, according to Dow Jones Newswires.
"There is a lot of optimism in what I am saying because I see the recovery coming," Naimi said.
Analysts expect the OPEC cartel to keep member nations' production quotas unchanged on Thursday.
Underscoring hopes for a rebound, the Conference Board reported Tuesday a reading on U.S. consumer confidence jumped to 54.9 in May from an upwardly revised 40.8 in April -- the fourth largest in the 32-year history of the survey -- as expectations for jobs improved,
Also Tuesday, the Energy Information Administration reported that average gasoline prices rose 12.6 cents last week to stand at $2.435 a gallon, the highest level in seven months.
The EIA is scheduled to release last week's petroleum inventories data on Thursday, a day late due to the Memorial Day holiday.
EIA's long-term prediction
On Wednesday, the EIA predicted that light, sweet crude oil prices are expected to rise to $110 a barrel in 2015 and $130 a barrel in 2030.
Global oil demand will grow to 91 million barrels a day in 2015 and 107 million barrels a day in 2030, the EIA said in its annual report on the international outlook for energy.
Global oil supply will rise to 106.6 million barrels a day by 2030. The EIA also said natural gas consumption will increase to 153 trillion cubic feet in 2030.
The EIA's prediction is based on a scenario in which current laws and policies remain unchanged throughout the projection period.
EIA's projected timeframe for the rise in oil prices contrasted with other oil analysts and producers.
Saudi Arabia's Ali Naimi had warned on Monday that oil prices could increase beyond their 2008 record high around $150 within three years as falling investment in oil production will sharply cut output.
Global investment in oil and gas projects is expected to slump 21% this year from a year ago, falling for the first time in a decade, according to a report released Tuesday by the International Energy Agency.
More than 50 major oil and natural-gas projects around the world have been cancelled or delayed by at least 18 months since October, the IEA, the energy advisor to 28 major energy consuming countries, said in the report. See related story.
