NEW YORK – Oil prices rose more than $1 a barrel on Monday, reversing course from last week, when prices declined by more than 10 percent due to rising U.S. supplies and slower economic growth.
Light, sweet crude for June delivery climbed $1.20 to $50.92 a barrel on the New York Mercantile Exchange (search), where on Friday oil prices settled below $50 a barrel for the first time since Feb. 18. A week ago, prices were above $55 a barrel.
While there was no obvious catalyst for Monday's price surge, analysts said the turnaround had elements of a technical rebound and that it also signaled the market's persistent concern about strong demand.
"Nothing happened," said oil analyst Carl Larry of Barclays Capital. Larry said he believes prices just moved back into a more appropriate range, given the supply-demand fundamentals.
"Swings up to $56, or down to $49, can be viewed as speculative trading," he said.
That said, if more evidence emerges that the economy is cooling off or if motorists begin to drive less because of the high price of gasoline, the price of oil has the potential to fall as low as $45 a barrel, Larry said. "I think the next couple of weeks will be key," he said.
Unleaded gas futures rose 1.84 cents to $1.5145 a gallon, while heating oil rose 3.73 cents to $1.4632 a gallon.
Brent crude was not trading, with London's International Petroleum Exchange (search) closed because of a public holiday
Last week, the U.S. Energy Department (search) said inventories of crude oil in the largest energy-consuming country grew by 5.5 million barrels to 324.4 million barrels, or 9 percent above year-ago levels — the 10th time supplies have risen in 11 weeks.
Also last week, the U.S. Commerce Department (search) announced that the U.S. economy grew at a slower-than-expected rate of 3.1 percent in the first quarter, easing concerns over booming crude oil demand.
"The high price of oil does now seem to be coming home to roost in economic terms," oil analyst Peter Beutel of Cameron Hanover in New Canaan, Conn., said in a research note. "And after having hurt consuming economies, it now seems that economic softening may contribute to weakness in oil prices."
Traders, though, are still leery of declaring the end of high oil prices, saying that another run-up above $50 a barrel would hardly come as a surprise given still-tight global supplies and market jitters about even the slightest output disruption.
While oil futures have fallen from their recent peak above $58 a barrel, prices remain more than 30 percent higher than a year ago.
Strong global demand, concerns about limited excess production capacity and fears of unplanned supply disruptions have kept prices high in recent years.