Updated from 11:24 a.m. EST
Energy futures followed equity prices higher Tuesday at the New York Mercantile Exchange.
The April contract for light sweet crude oil closed the session 62 cents higher at $60.69 per barrel. Heating oil was up 3 cents at $1.75 a gallon. Gasoline climbed a penny to $1.85 a gallon.
The near-term contract for natural gas ended the day 22 cents higher at $7.47 per million British thermal units.
Traders say that equity markets have been signaling that the global economy could be heading for a slowdown. Commodities are moving in the same direction as equities because the demand for commodities is largely determined by the pace of economic growth.
Equities in Asia, Europe and the U.S. fell sharply on Monday, and commodities followed suit, falling in Monday's trading session at the Nymex. Stocks recovered in global equity markets Tuesday and commodities moved higher on the news.
According to analysts, it will take a decrease in volatility in stock markets for commodities to become decoupled from equities and to once again move on their own accord. Once that happens, energy prices will likely be affected by whichever news or rumor crosses the tickertape first.
Edward Meir, energy analyst at Man Financial, wrote in a report:
We think the price bias should be lower from here, even if one were to strip away the recent bearish impact of the equity markets. Colder weather is receding as a factor ... OPEC seems to be signaling that it is standing pat in advance of its March 15 meeting, inventories are still comfortable despite the latest draws, and U.S. economic growth prospects are more uncertain at this stage in the growth cycle.
Alternatively, geopolitical turmoil could easily launch energy prices higher. Two U.S. aircraft carrier groups are currently perched in the Middle East while the United Nations is negotiating with Iran to halt its nuclear enrichment program. Rebel groups are stepping up their guerilla activity in Nigeria's oil-rich delta region. An increase in violence in either region could cause a breakdown in crude supplies.
Larry Levin, technical analyst at Secrets of Traders in Chicago, says that crude oil has built a strong foundation near $60, and that crude oil will likely stay in the $60-$62.50 range this week. "If the stock market was to rally from this recent monster selloff, crude oil could move as high as $68," Levin says.
Energy stocks traded broadly higher in Tuesday's trading session. The
iPath Goldman Sachs Crude Oil
exchange-traded fund closed Tuesday up 1.2% at $36.95.
Electrical systems construction firm
was upgraded by Matrix Research from hold to buy. Its stock closed up 3.5% at $59.38.
was downgraded by RBC Capital Markets from outperform to sector perform. The company's stock ended 1.2% lower at $27.32.