Oil prices pick up Wednesday afternoon, stock market reverses declines

Oil prices recovered slightly after 4 per cent loss on Tuesday

At the IHS Energy CeraWeek, Saudi Arabia’s oil minister, Ali Al-Naimi said output cuts aimed at boosting low oil prices won’t work.  Following his comments, the price of crude oil fell over four per cent.

NEW YORK _ The stock market reversed steep declines and ended slightly higher on Wednesday, thanks in part to a pickup in the price of crude oil.

Indexes continue to be weighed down by bank stocks, which remain under pressure due to economic unease and worries about the amount of loans on their books to struggling oil and gas companies.

The Dow Jones industrial average rose 53.21 points, or 0.3 per cent, to 16,484.99. The Standard & Poor’s 500 index rose 8.53 points, or 0.4 per cent, to 1,929.80 and the Nasdaq composite rose 39.02 points, or 0.9 per cent, to 4,542.61.

Stocks had been dramatically lower earlier in the day, with the Dow down as much as 265 points. However as oil prices recovered through the day, so did energy stocks and the broader market. After being down nearly 4 per cent earlier, oil closed up 28 cents, or 1 per cent, to $32.15 a barrel. The energy component of the S&P 500, which had been down roughly 2 per cent, closed up 1 per cent.

“As goes oil, so goes everything,” said Ian Winer, co-head of equities trading at Wedbush Securities.

The market’s only place of weakness by the end of trading was the financial sector. Bank stocks had some of the biggest losses, and the financial services component of the S&P 500 lost 0.8 per cent.

Despite substantial gains in recent days, many investors remain hesitant to commit more money to the market and don’t need much reason to sell, analysts say. Bank stocks are often a proxy for how well an economy is expected to do, since loans can sour during an economic slowdown. While oil rose on Tuesday, the pressure on the commodity prices seems to be ever downward.

While oil rose 1 per cent Wednesday, crude fell 4 per cent the day before after Saudi Arabia’s oil minister, Ali Al-Naimi, told a meeting of energy leaders in Houston that production cuts aimed at supporting falling crude prices won’t work. He said that the market should instead let some operators go out of business.

“Fundamentally, there’s nothing that shows the U.S. economy is faltering here. But people continue to be worried about low commodity prices and there is general unease that has lingered from how the markets started this year,” said David Kelly, chief investment strategist at J.P. Morgan Funds.

Bond prices fell. The yield on the 10-year U.S. Treasury note edged rose to 1.75 per cent from 1.72 per cent.

In other energy trading, heating oil rose 3.7 cents, or 3.6 per cent, to $1.059 a gallon, wholesale gasoline futures rose 4.4 cents, or 4.6 per cent, to $1.01 a gallon and natural gas fell 0.4 cents, or 0.2 per cent, to $1.778 per thousand cubic feet. Brent crude oil, which is used to price oil internationally, rose $1.14, or 3.4 per cent, to $34.10 a barrel in London.

In metals trading, gold closed up $16.50, or 1.3 per cent, to $1,239.10 an ounce, silver rose 5.2 cents, or 0.3 per cent, to $15.33 an ounce and high-grade copper futures fell 0.8 cents, or 0.4 per cent, to $2.101 a pound.

The dollar rose to 112.05 yen from 111.97 yen in the previous day’s trading. The euro was mostly unchanged unchanged at $1.1011.

The Canadian press