Crude oil prices inched up on Friday after three days of losses as investors struggled with concerns about the US economy but held on to hopes that US President George W. Bush's stimulus plan will work.
Investors were keeping a close eye on the stock market, which also bounced between gains and losses. They wondered whether Bush's plan, which includes US$145 billion in proposed tax relief, would be enough to stave off a severe economic downturn.
Energy investors sometimes view stocks as a proxy for economic growth, so they were heartened earlier on Friday when the Dow Jones Industrials rose sharply, rebounding from Thursday's 306-point thrashing.
But dismal employment, housing and manufacturing data released in recent days remain fresh in the minds of traders who worry demand for oil and gas will fall. And the Conference Board said on Friday its index of leading economic indicators slid 0.2 percent last month, more than the 0.1 percent decline analysts expected.
"The reason why there's a [stimulus] plan is because things are awful," said James Cordier, president of Liberty Trading Group in Tampa, Florida.
Light, sweet crude for February delivery rose US$0.44 to settle at US$90.57 a barrel on the New York Mercantile Exchange, but prices alternated frequently between gains and losses. Earlier on Friday, futures rose above US$91.
Brent crude for March delivery rose US$0.48 to US$89.23 a barrel on London's ICE Futures exchange.
Concerns about the economy are balanced by a view that demand remains strong in the rest of the word, where economic growth does not appear to be slowing, Cordier said.
"Global demand ... is going to keep oil prices north of US$85 [a barrel]," Cordier said.
Indeed, the International Energy Agency and the Energy Department both expect domestic demand for oil to slow this year while global demand remains strong.
But investors of all types are having a hard time persuading themselves to buy oil, or stocks.
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