Oil Prices Bounce Back

Updated from 1:36 p.m. EST

Energy prices were higher Tuesday as a confluence of factors, including a continuing cold snap and planned additions to strategic U.S. stockpiles, lifted the market.

March-dated contracts for light, sweet crude closed up $2.46 at $55.04 a barrel on the New York Mercantile Exchange.

Other parts of the energy complex also strengthened. Natural gas prices moved up 28 cents to $7.60 per million British thermal units. Heating oil rose 7 cents to $1.58 a gallon, and gasoline gained 7 cents to $1.45 a gallon.

"We touched $49.90 [for a barrel of crude] last week, but there was no follow-through," says Adam Sieminski, chief energy economist at Deutsche Bank in New York. Much of the decline that dragged prices down from above $60 was the result of warm weather and speculators selling short, he explains. "That's over now."

Working in favor of the bulls was a late session announcement that the U.S. government would more than double the size of its Strategic Petroleum Reserve over the next two decades to 1.5 billion barrels from 691 million barrels currently. The initial impact will be government purchases of an additional 100,000 barrels a day.

Meanwhile, news out of Nigeria was also helping bolster prices. Wire service reports state that militants in the country's oil-rich Niger Delta region kidnapped two Westerners, including one from the U.S. In addition, 24 Philippine nationals were said to have been taken prisoner over the weekend.