Oil Prices Post Small Gain

Still, prices are just $6 below their all-time high of $58.28 reached in April, when OPEC had already made significant production increases. A question remains as to whether refineries will be capable of feeding a growing global demand for fuel, prompting traders to secure future crude contracts for fear of a supply crunch.

"The market is trading at the top of a recent price range," says Jeff Mokychic, futures analyst at Bridgeton Global Investors Services. "There is some room for profit-taking if the Energy Department's report tomorrow shows another build in inventories."

The department is expected to say Wednesday that crude stockpiles rose for the 12th time in 13 weeks, this time by 1.8 million barrels. Gasoline reserves are expected to increase by about 1 million barrels.

"Crude at $50 is overvalued considering the amounts we have in inventories, but prices won't really fall back to the low $40s. Seeing how volatile the market is, oil prices can even bounce to $60, but that won't shock the market too much anymore," Mokychic says.

Fears of future supply disruption from major exporting countries with political unrest such as Venezuela and Russia have further exacerbated upward price pressure.

In earnings news, El Paso(EP Quote) reported first-quarter profit despite significantly lower revenue, as gains from an asset sale helped offset mark-to-market losses on natural gas hedges. The Houston natural gas company earned $106 million, or 17 cents a share, in the quarter, compared with a loss of $206 million, or 32 cents a share, last year. Revenue fell 22% to $1.21 billion. Analysts had been forecasting earnings of 21 cents a share in the 2005 quarter. Shares fell 40 cents, or 3.79%, to $10.15.

NRG Energy(NRG Quote), the Princeton, N.J.-based electric utility, said mild weather and high fuel prices cut its first-quarter earnings, although they were still in line with analysts expectations. Net income fell to $22.6 million, or 21 cents a share, from $30.2 million, or 30 cents a share, a year ago. Excluding one-time items, earnings were $14.4 million, or 16 cents a share. The company raised its 2005 EBITDA outlook to $600 million from $560 million. Share rose 91 cents, or 2.79%, to $33.50.