By Jerry A. DiColo Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Crude futures rose Tuesday after five days of losses, boosted by a rebound in equities markets.
Light, sweet crude for September delivery recently traded 72 cents, or 1%, higher at $75.96 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded $1 higher at $76.63 a barrel.
Oil prices have been unable to shake the pull of equities, which have led crude for several months as an indicator of future economic growth. The Dow Jones Industrial Average appears set to open higher after housing starts rose by more than anticipated and earnings reports sparked enthusiasm.
Futures on the Dow were recently higher, up 51 points to 10324, and S&P 500 futures added 7 points to 1084.
"There is no doubt that we are seeing a big correlation with equity markets," said Carl Larry, an analyst with Oil Outlooks and Opinion. "When equities find a bottom, oil sees a bottom too."
The Commerce Department reported housing starts increased by 1.7%, more than the 0.2% rise seen by economists. The economic data also helped push crude higher, as traders watch for even the smallest signs of economic growth, which should eventually translate into higher oil demand.
The turn higher in crude prices follows a week of declines for oil, which fell from highs above $82, back into a trading range between $70 and $80 that has mostly contained prices for several weeks.
With supplies of oil and oil products near record highs, global demand remains the primary focus for traders worried about the slowing recovery and its ability to support higher prices. Without signals from economic data or other markets that growth will accelerate, analysts say crude could remain stuck in its latest range for some time.
"While we still anticipate an eventual crude price decline down into the low $70 area, we are also cognizant of the fact that $3 to $4 price corrections off of last week's sharp price plunge are always possible given the fact that the oil complex is generally being steered by the equity and currency markets," said Jim Ritterbusch, president of oil research firm Ritterbusch and Associates.
The U.S. energy department's Energy Information Administration is due to report weekly inventory data at 10:30 a.m. EDT Wednesday. Analysts expect U.S. crude stockpiles to fall by 1.4 million barrels, according to a Dow Jones Newswires survey.
Gasoline inventories are seen down by 500,000 barrels, a meager drop amid the peak of the important summer driving season. Distillates, which include heating oil and diesel fuel, are expected to show a 700,000 build, while refineries reduce production capacity by 0.7 percentage point.
Sky-high gasoline inventories have resulted in a much larger drop in futures prices for the fuel compared to crude oil. Front-month gasoline prices have fallen by more than 11% since early August, while crude is down 8% over the same period.
Front-month September reformulated gasoline blendstock, or RBOB, recently traded 2.65 cents, or 1.4%, higher at $1.9508 a gallon. September heating oil recently traded 2.77 cents higher at $2.0165 a gallon.
-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; jerry.dicolo@dowjones.com.
