Crude Oil Rebounds From Early Drop

Last week's surprise decline in inventories was mostly caused by a slowdown in foreign oil imports after Tropical Storm Edouard parked itself over the Gulf of Mexico. Oil prices rallied almost $3 after last Wednesday's EIA report was released. Going unmentioned during the rally was the fact that the oil-tankers that were held up by Edouard didn't turn around and go home. Thus, the imports that disappeared from last week's inventory report will likely show themselves this time.

Elsewhere on Tuesday, NATO members levied a public reprimand against Russia for its failure to expedite its military withdrawal from Georgia. Russia's swagger has carried worldwide geopolitical risk to levels not seen since the Soviet era, and the reaction by NATO gave oil prices an additional boost.

Tropical Storm Fay fizzled out as a major influence in energy markets after it made landfall in the Florida Keys without damaging any major oil or natural gas installations in the Gulf of Mexico. Oil traders pushed the near-month WTI contract above $115 a barrel last weekend as Tropical Storm Fay made its way through the Caribbean. The storm is reportedly responsible for more than 50 deaths in Haiti and the Dominican Republic. Oil companies in the Gulf prepared for the worst, shutting in some wells and evacuating personnel from offshore platforms.

Meanwhile, energy stocks staged a major turnaround after starting off the day in a downward slide.ConocoPhillips (COP) was up 2.2% at $78.68, Chevron (CVX) was adding 1.4% at $84.25, PetroBras (PBR) was advancing 3.6% to $49.50, and Exxon Mobil (XOM) was gaining 1.5% at $77.65.