Updated from 11:23 a.m. EDT
Crude edged higher Tuesday as traders shrugged off more bearish OPEC promises and bought at some of the lowest prices in three months.
After falling early, June crude closed up 34 cents to $48.95 a barrel on Nymex. Gasoline futures rose 3 cent to $1.43 a gallon. Oil futures have traded below their long-held range of $50 to $55 a barrel for the past three sessions, as short-term supply concerns waned.
Oil fell 7% last week after a host of bearish supply and demand reports signaled that a slowdown in the global economy might curtail demand.
The U.S. government is expected to release a weekly report Wednesday showing a 1 million-barrel gain in crude oil stockpiles. It would be the 13th gain in 14 weeks.
OPEC on Tuesday cut its forecast for world oil demand growth in 2005 by 80,000 barrels a day to 1.82 million, citing lower-than-expected first quarter consumption,
reported. The cartel also said it expects to increase spare capacity this year to about 10% from new oilfields. Current world excess capacity is 1 million to 2 million barrels a day. OPEC has recently been producing about 30 million barrels a day.
OPEC has been working hard to pump extra oil in order to convince the world there is enough of it to go around. In an energy conference Tuesday, Saudi Arabian Oil Minister Ali al-Naimi reiterated that high oil prices are not in OPEC's best interest,
reported. High oil prices have occasionally caused policymakers to agitate for alternative energy sources, potentially lessening demand for crude.
Al-Naimi also said his country plans to continue producing at full tilt despite rising inventories. Clearly a lot of OPEC rhetoric has gone into dampening April's price rally, but concerns over long term supply fundamentals seem to be resisting these reassurances, as oil prices remain range-bound between $48 and $52 a barrel.
Shares of the major oil producers, which have fallen in the last few trading sessions, recovered modestly in late trading. Some analysts have viewed the weakness in share prices as a buying opportunity.
"We see the risk and reward ratio as favorable with oil prices below $50," said Brain Hicks, who manages the $400 million U.S. Global Resources Fund. "The recent pullback is a good opportunity to take a position, with the expectation for a strong demand in the fourth quarter."
Hicks views companies such as
as being "sold off to attractive entry levels." The fund is also eyeing mid-caps such as
as potential add-ons to its portfolio.
, which has lost about 6% since Wednesday, was raised to buy from hold by A.G. Edwards' analyst Bruce Lanni. "The recent pullback that began with an over-reaction to its lower-than-expected first-quarter earnings, now represents an attractive entry point," the analyst said in a note. He also raised Exxon's price target to $60. Shares were up 0.3% to $53.52.
increased 1.61%, and
edged higher by 1.20%.
said it agreed to join Mitsubishi's wholly owned subsidiary, Sound Energy Solutions, in the development of a proposed liquefied natural gas import terminal in the Port of Long Beach, California. The terminal would be able to process about 5 million tons of LNG per year. The U.S. currently has only 5 receiving terminals for LNG imports, but numerous proposals are in the pipeline awaiting approvals.