NEW YORK – Oil prices rose above $82 a barrel Tuesday as the stock market rebounded from Monday's losses on brighter economic news. Benchmark crude for November delivery gained $1.35 to settle at $82.82 a barrel on the New York Mercantile Exchange.
The Dow Jones Industrial Average was up over 200 points in afternoon trading. The NASDAQ and the S&P 500 each rose more than two percent. Stocks took off after the Institute for Supply Management said that the U.S. services industry grew last month. Stocks worldwide got a boost as Japan's central bank cut interest rates to near zero to boost that country's economy. Improving economies generally lead to stronger demand for oil and gas.
Gas pump prices rose again across the U.S., a result of oil prices climbing more than $6 a barrel in the last week. The average price for a gallon of regular is $2.732, according to AAA, Wright Express and Oil Price Information Service. That's about 2.5 cents higher than Monday and 27 cents above a year ago.
The SpendingPulse U.S. Gasoline Demand Report for last week found retail gasoline consumption increased 1.1 percent from the previous week but was lower year-over-year for the fourth consecutive week, down 1.6 percent.
Energy consultants Cameron Hanover said one of the best correlations lately with oil prices has been the dollar's relationship to the euro. On Monday the dollar gained against the euro, making oil and other commodities priced in dollars more expensive for foreign investors. Crude prices retreated. On Tuesday the dollar fell against the euro and oil prices rose.
The state of oil inventories could also determine whether prices continue to rise in the short term or level off. The Department of Energy's Energy Information Administration releases the weekly supplies report on Wednesday. Analysts expect crude inventories to shrink by 1.3 million barrels, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos. Lower supplies can help push prices higher.
"A bullish set of statistics promises to generate more interest than a bearish set of numbers," Cameron Hanover said. "Despite Monday's sell-off, oil prices still seem to want to advance."
Natural gas prices are still languishing, mainly because of huge supplies and weather outlooks for mild weather. "Weather forecasts continue to provide little support for gas prices in the coming weeks, with normal to above-average temperatures expected throughout much of the eastern half of the country," said Addison Armstrong, senior director of market research at Tradition Energy. He added that oil and gas operations in the Gulf of Mexico did not appear to be under the gun from a tropical disturbance in the Caribbean.
Natural gas added 1.6 cents to settle at $3.743 per 1,000 cubic feet. In other Nymex trading, heating oil gained 1.79 cents to settle at $2.3026 a gallon and gasoline picked up 3.22 cents to settle at $2.1255 a gallon.
In London, Brent crude rose $1.56 to settle at $84.84 a barrel on the ICE Futures exchange.
___Associated Press writer Pablo Gorondi in Hungary contributed to this report.