NEW YORK (
) -- Energy futures strengthened Tuesday alongside a broad equity rally as investors felt confident enough to take on riskier assets.
New York manufacturing activity, which strengthened largely as expected in June likely lent some momentum to the day's gains but other macroeconomic releases weren't as supportive. The National Association of Home Builders' housing market index showed that home builder sentiment weakened in June. May import prices weakened as a result of lower fuel prices and export prices showed milder growth in comparison with the previous month.
A weaker U.S. dollar was also likely responsible for upping the appeal of dollar-priced commodities. The greenback weakened 0.7% against a basket of currencies, according to the dollar index.
The July crude contract added $1.82, or 2.4%, to settle at $76.94 a barrel. Oil-related equities followed oil prices higher, making it one of the day's strongest sectors. The NYSE Arca Oil index advanced by 2.9% and the Oil Service Sector index jumped 4.7%.
On the Dow, components
gained 1.9% and 1.4%, respectively. Executives from the two companies joined those of
Royal Dutch Shell
to testify before a House subcommittee on American drilling and energy policies in light of the
Gulf of Mexico oil spill. BP Americas president Lamar McKay also got grilled in a preview of what awaits chief executive Tony Hayward when he testifies on Thursday.
It was a tough day for BP even outside of Washington. Earlier, credit rating agency
Fitch cuts its rating on the company by six notches to triple-B from double-A. BP also had to stop siphoning oil when a fire thought to be caused by lightning broke out on one of its collecting ships, according to
. The stock, however, finished the session roughly 2% higher.
On the fundamental data front, the American Petroleum Institute said crude oil supplies added 579,000 barrels in the week ended June 11. Analysts surveyed by Platts had been expecting a decline of 1.75 million barrels.
On Wednesday morning, the government's Energy Information Administration is set to release its own inventory report. In addition to the drop in crude stocks, analysts are also projecting a 640,000-barrel increase to gasoline supplies and an additional 760,000 barrels of distillates, according to the Platts poll.
Elsewhere on the Nymex, July natural gas futures added 16 cents, or 3.7%, to settle at $5.19 per million British thermal units. Heating oil for July delivery gained 4 cents, or 2.1%, to settle at $2.07 a gallon, and July gasoline rose by 5 cents, or 2.2%, to settle at $2.12 a gallon.
--Written by Melinda Peer in New York