Crude Oil Settles Higher

NEW YORK (TheStreet) -- Crude oil futures added to recent gains after wavering through much of Tuesday's trading session.

The February contract for crude on the Nymex finished Tuesday's session up by 26 cents, or 0.3% at $81.77 a barrel after trading across the flat line for most of the day. The mild gains come a day after prices surged above $81 a barrel for the first time in two months as frigid temperatures and improving economic data lifted demand expectations.

On Tuesday, the Commerce Department reported a better-than-expected 1.1% jump in factory orders in November, adding support to the picture of an improving manufacturing sector a day after the Institute for Supply Management said its manufacturing index rose to 55.9 from 53.6 in November.

A wavering U.S. dollar also contributed to oil's price uncertainty. The Dollar Index rose 0.2% against a basket of foreign currencies after slipping earlier in the session.

Late Tuesday, the American Petroleum Institute said crude oil stockpiles fell by 2.3 million barrels in the week ended Jan. 1, according to a report from Dow Jones. Analysts polled by Platts had been expecting a decline of 1.6 million barrels. But futures dipped after the close as the same industry assessment showed a larger than forecast jump in fuel inventories.

At 10:30 a.m. EST Wednesday, the Energy Information Administration releases its supply report for last week.

Integrated oil companies finished ahead as oil prices rose. Exxon Mobil(XOM) added 27 cents to $69.42, and ConocoPhillips(COP) closed up 5 cents to $52.63. Chevron's(CVX) stock gained 56 cents, or 0.7%, at $79.62 and BP(BP) added 42 cents to $59.57.

Oilfield services showed strength with the Philadelphia Oil Service Sector index gaining 2.1% and the Oil Service HOLDRs(OIH) ETF up by $2.75, or 2.2%, at $126.23. Baker Hughes(BHI), BJ Services(BJS) and Smith International(SII) were up by 5.9%, 5.1% and 3%, respectively.

Refiners, which rose on a sector upgrade to neutral from underweight on Monday, were still trading higher Tuesday. Holly Corp.(HOC) was up 6.5%. Delek US Holdings(DK) rose 4% and Valero Energy(VLO) was up by 2.6%.

Shares of natural gas companies traded broadly higher even as natural gas futures for February delivery lost 20 cents to $5.68 per million British thermal units. On Monday, Chesapeake Energy(CHK) said a unit of France's Total(TOT) will acquire a stake in Chesapeake's Barnett Shale assets in a $2.25 billion deal. The move comes after Exxon Mobil announced its own expanded foray into the natural gas space last month, buying XTO Energy(XTO) in a $31 billion all-stock transaction. Chesapeake's stock closed 3.1% higher at $28.97.

Argentine natural gas distribution company MetroGas(MGS) and Aegean Marine Petroleum Network(ANW), a refined marine fuel supplier, were among the New York Stock Exchange's biggest gainers. Their stocks finished up by 9.4% and 13.8%, respectively.

The February heating oil contract added 2 cents to settle at $2.19 a gallon after recently rising to its highest level in 14 months. The February reformulated gasoline contract also gained 2 cents, to close at $2.13 per gallon.

--Written by Melinda Peer in New York.

>To order reprints of this article, click here: Reprints