Oil rises on hope stimulus package can spur growth

[Americanhero1]

SINGAPORE – Oil prices rose slightly to $42 a barrel Wednesday in Asia, tempering an overnight tumble on expectations that economic stimulus packages will help arrest the global slowdown and boost demand for crude.

Light, sweet crude for March delivery rose 50 cents to $42.08 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange. The contract fell overnight $4.15 to settle at $41.58 amid more evidence of decline in the U.S. housing industry, more job cuts and plunging consumer confidence.

The House of Representatives is expected to vote Wednesday on an $825 billion stimulus bill which backers say could create up to 4 million jobs. The bill, which includes roughly $550 billion in spending and $275 billion in tax cuts, could be signed by President Barack Obama by mid-February.

Policymakers throughout Europe and Asia have scrambled to increase spending and lower interest rates as the worst recession in decades prompts job cuts and a drop in consumer demand.

"There are some expectations in the market that the various stimulus packages will likely do some good and stop a further deepening of the recession," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.

Oil has mostly traded between $40 and $45 a barrel since mid-December as the Organization of Petroleum Exporting Countries implements 4.2 million of production cuts announced since September.

"The production cuts by OPEC probably have a lot to do with oil now stabilizing in this range," Shum said.

Investors will be watching for signs of further slowing U.S. demand in the weekly oil inventories report to be released Wednesday by the U.S. Energy Department's Energy Information Administration.

The report is expected to show that oil stocks rose 3.4 million barrels last week, according to the average of estimates in a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.

Crude inventories have grown 14 million barrels in the last three weeks, evidence hundreds of thousands of job losses during recent months have begun to impact consumer spending.

"There will be ongoing downward pressure on oil prices with all the bad economic news that keeps coming out," Shum said. "The announcements of job cuts around the world this week have been staggering."

The Platts survey also projects that gasoline inventories rose 1.8 million barrels and distillates fell 1.8 million barrels last week.

In other Nymex trading, gasoline futures rose 0.76 cent to $1.12 a gallon. Heating oil gained 1.10 cents to $1.39 a gallon while natural gas for February delivery jumped 2.2 cents to $4.53 per 1,000 cubic feet.

In London, the March Brent contract rose 62 cents to $44.35 on the ICE Futures exchange.


http://news.yahoo.com/s/ap/20090128/ap_on_bi_ge/oil_prices

[briann]

Investors arent that stupid.  If the stimulus package could spur growth...we would see that reflected in the DJIA... which we havent.... weve actually seen a significant decline since its announcment.

Oil has been lingering around that price for the last 3 weeks... and even got as high as 46/barrel.... and none of that has anything to do with that retarded stimulus plan.

[Lewinsky Stinks, Dr. Brennan Rocks]

Unfortunately, if enough investors want to bring the price of oil back up, it will become reality, regardless of actual supply/demand.

This is exactly the reason why the housing bubble happened.