Updated from 11:11 a.m. EDT
Crude oil futures made a dash to higher ground at the New York Mercantile Exchange Tuesday after selling off in the overnight trading session.
Sparking the rally were new analyst predictions of a drop in gasoline stores when the Energy Information Administration's inventory data come out Wednesday morning.
Crude futures traded near the $112-a-barrel level for most of the morning before veering upward to reach an intraday high of $115.70 a barrel around midday. Recently, September West Texas crude was selling for $114.54 a barrel at the Nymex, up $1.67, and Brent was at $113.46 a barrel, a gain of $1.52.
Reformulated gasoline futures wereadding 5 cents at $2.87 a gallon, heating oil was up almost 6 cents at $3.14 a gallon, and near-month natural gas was adding 5 cents at $7.94 per million British thermal units.
A Bloomberg survey revealed that analysts believe gasoline stocks for the week ended Aug. 15 probably fell by 3 million barrels. The survey predicted that the inventory report will also show a 1 million-barrel rise in crude oil stocks and an 850,000-barrel rise in distillate inventories.
The predicted fall in gasoline levels was what alarmed crude markets. Gasoline inventories are already at the low end of their average range for this time of year, and total motor gasoline stocks dropped 6.4 million barrels the week before last.
U.S. refineries are currently operating at around 85% utilization -- an abnormally low rate for this time of year. The recent string of EIA oil demand data showing enormous drops in domestic consumption for reformulated gasoline, diesel fuel and jet fuel is clearly failing to entice U.S. refiners to increase their production rates for petroleum-derived products.
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.
was up 2.2% at $78.68,
was adding 1.4% at $84.25,
was advancing 3.6% to $49.50, and
was gaining 1.5% at $77.65.
U.S. Oil Fund
, an exchange-traded fund that closely tracks the performance of near-month WTI futures, was recently 1.3% higher at $92.34.