NEW YORK ( TheStreet) -- Crude oil prices strengthened Tuesday as the dollar lost ground to the euro, which rose on expectations that a rescue plan is in the works for Greece.
The crude oil for March delivery contract gained $1.86, or 2.3%, to settle at $73.75 a barrel.
Darin Newsom, senior commodities analyst at Telvent DTN, cited the greenback's movement as a primary driver for prices. The dollar index, which measures the buck against a basket of currencies, was down 0.6%.
The dollar was specifically slumping against the euro Tuesday, as several reports ruminated on a European rescue for Greece's debt quandary."What we're seeing, we've got the dollar coming down a little, but we're not seeing change to underlying fundamentals," Newsom said, who also expects the rally to stall in the next few days and the dollar to firm up. "It's not a tight supply situation." In its recently released global energy outlook, Barclays Capital said that while crude oil, coal and carbon pricing are expected to strengthen in the next year or two, natural gas and U.S. power prices will take longer to recover. "We see price support for crude in 2010 and even more so in 2011, as demand recovers, inventories return to balance and new supply slows. We like the commodity- and oil-biased E&P investments in credit and equities," the report said. It also expressed a negative view on downstream oil profitability in addition to investments sensitive to oil product margins. "We expect refining capacity additions to exceed demand growth at least until 2010. We are negative on independent refiners in credit and equities." After the close of trading Tuesday, the American Petroleum Institute said crude stockpiles swelled by 7.2 million barrels for the week ended Feb. 5, according to MarketWatch. Analysts polled by Platts had anticipated a smaller build of 2 million barrels The industry group also reported a 1.55 million barrel build in gasoline stocks and a 1.53 million barrel drawdown in distillate fuel inventories. Analysts had predicted a 1 million barrel increase in gasoline supplies and 1.75 million barrel decline in distillates. A government inventory report from the Energy Information Administration is due out on Friday at 11:00 a.m. EST. The report, which typically comes out on Wednesday mornings, will be delayed because Federal government offices in Washington D.C. will remain closed in anticipation of inclement weather. Energy-related equities were helping lead the broader market higher. Both the NYSE Arca Oil Index and Philadelphia Oil Service Sector Index gained 2.3% and 3.2%, respectively. Cameron International (CAM - Get Report), one of the biggest movers on the S&P 500, rose 6.6% to $39.33 after beating forecasts by a penny and providing upbeat patter during an earnings call. The drilling equipment manufacturer reported adjusted fourth-quarter earnings of 54 cents a share, despite an expected drop in sales and narrowing margins. BJ Services (BJS) gained 2.1% to $20.76 despite reporting that it swung to a loss in the first quarter. News reports say the government of Ghana may have stymied the sale of a large oilfield stake to Exxon Mobil (XOM - Get Report). The Wall Street Journal reported that the government blocked the $4 billion sale, but a separate report from Reuters says the government has only threatened, but not blocked the deal as of yet. Exxon Mobil shares added 1.3% to $65.20. Elsewhere on the Nymex, March natural gas shed 11 cents, or 2.1%, to settle at $5.33 per million British thermal units. Heating oil for March delivery gained 5 cents, or 2.7%, to finish the session at $1.94 a gallon and the March gasoline contract improved 4 cents, or 1.8%, to settle at $1.93 a gallon. -- Written by Sung Moss and Melinda Peer in New York.