NEW YORK – Oil soared again Tuesday as the low prices of the past few months force oil companies to slow down production in the U.S. and elsewhere.
In the morning, BP became the latest major oil company to announce it will cut exploration spending this year. Oil seemed to get a further boost in the afternoon from a run-up in the U.S. stock market.
U.S. oil rose $3.48, or 7 per cent, to $53.05 a barrel, its highest closing price this year. Brent crude, a benchmark for many international oils imported by U.S. refineries, rose $3.16, or 5.8 per cent, to $57.91 a barrel.
Oil has gained about 19 per cent over three trading sessions. The sudden rally follows a months-long decline that knocked oil prices down about 60 per cent from last year’s peak of $107 a barrel.
The gains began Friday with a report showing a sharp drop in the number of rigs in the U.S. drilling for oil. On Monday, BP announced a 20 per cent drop in capital spending for this year. That follows Chevron’s projected cut of 13 per cent.
The market’s momentum faces some tests. The Energy Department issues its weekly report on U.S. supplies Wednesday. Analysts expect an increase of 2.8 million barrels, according to Platts. On Friday, the government puts out its latest report on U.S. employment.
Jim Ritterbusch, president of energy consultant Ritterbusch Associates, also noted that even though production in the U.S. won’t grow as much as previously expected, it will still proceed at a pace not seen for about three decades. And BP forecast an extended period of low oil prices.
In other futures trading in New York:
— Wholesale gasoline rose 5.67 cents to $1.601 a gallon
— Heating oil jumped 8.9 cents to $1.847 a gallon
— Natural gas gained 7.4 cents to $2.754 per 1,000 cubic feet.