BLBG: Oil Rises as Equities Rally on Bank-Rescue Plan Speculation
Crude oil rose, following equities higher, on speculation a bank-rescue plan from President Barack Obama will boost financial companies.
Oil climbed as much as 3.7 percent as stocks rallied on the new president’s plans to complete a bank-rescue plan that can be paired with the $825 billion stimulus package. Prices fell earlier on speculation that a government report tomorrow will show that U.S. crude-oil inventories increased last week.
“There’s been a positive correlation between energy and equities, and this appears to be giving the oil market some support,” said Bill O’Grady, chief markets strategist at Confluence Investment Management in St. Louis.
Crude oil for March delivery rose $1.11, or 2.7 percent, to $41.95 a barrel at 10:05 a.m. on the New York Mercantile Exchange. Prices have fallen 6.3 percent this year, and are down 53 percent from a year ago.
Obama became the 44th U.S. president yesterday, inheriting the most severe economic crisis since Franklin D. Roosevelt was sworn in 76 years ago.
The Dow Jones Industrial Average increased 159.46 points, or 2 percent, to 8,108.55. The Standard & Poor’s 500 Index rose 18.2 points, or 2.3 percent, to 823.42.
The Energy Department is scheduled to release its weekly petroleum inventory report tomorrow at 11 a.m. in Washington, a day later than usual because of the Martin Luther King Jr. holiday on Jan. 19. The report will show that supplies probably rose 1.5 million barrels in the week ended Jan. 16, according to the median of 13 analyst estimates in a Bloomberg News survey.
Cushing Inventories
Stockpiles at Cushing, Oklahoma, where West Texas Intermediate, the grade traded on the Nymex, is stored, climbed 2.5 percent to 33 million barrels in the week ended Jan. 9. It was the highest level since at least April 2004, when the department began keeping records for the location.
“Attention is going to shift to the inventory report,” said John Kilduff, senior vice president of energy at MF Global Inc. in New York. “The deteriorating state of the economy is going to keep pressure on the oil market.”
Brent crude oil for March settlement rose 46 cents, or 1.1 percent, to $44.08 a barrel on London’s ICE Futures Europe exchange.
