Crude Oil Tops $20 a Barrel in Sharp Rebound

U.S. crude oil prices rebounded with a vengeance Tuesday, climbing more than 70 cents to close above the $20 a barrel level as the bullish mood that lifted prices nearly 10% last week reasserted itself.

“The whole floor is bullish,” said one trader during active afternoon trading. The strong rise came after a big drop Monday that was linked to technical factors within the market.

The benchmark U.S. crude, West Texas Intermediate for May delivery, ended the day up 71 cents at $20.05 a barrel on the New York Mercantile Exchange.

North Sea Brent blend for May delivery, the most widely traded international crude, was quoted at $18.50 a barrel, a gain of 55 cents from Monday and its highest level in 15 months.

Traders attributed the climb in crude prices to rising gasoline and heating oil prices, optimism that non-OPEC producers will reduce output and indications that the 13 nations of the Organization of Petroleum Exporting Countries are sticking to their production limits.

Rilwanu Lukman, OPEC president, said in Nigeria that the group is producing oil at about its quota of 18.5 million barrels a day.

Asked if the total was within this agreed ceiling, Lukman said: “I should think so, give or take a couple of percentage points.”

On Monday, U.S. crude oil prices plunged 82 cents a barrel to close at $19.51 because of the expiration of the April contract, which often creates volatile trading.

The contract closed at $20.33 a barrel Friday, giving it a gain of $1.83, or nearly 10% for the week.

“We’re pretty much back on track; the market looks really strong,” one trader said.

Analysts said the crude rally was also supported by higher prices for petroleum products, which rose on anticipation of a strong gasoline demand this summer and a stricter U.S. gasoline vapor pressure rule, which will tighten stocks.

The April unleaded gasoline contract ended with a strong gain of 1.66 cents at 57.14 cents a gallon. Gasoline prices have been pushed higher by new environmental regulations that will reduce the yield from a barrel of oil.

The April heating oil contract jumped 2.07 cents to 55.43 cents a gallon.