Oil rises slightly

Oil prices rose slightly Wednesday as the stock market posted modest gains, despite a government report that showed crude supplies increased more than expected.

In its weekly inventory report, the Energy Information Administration said crude stocks rose 3.9 million barrels in the week ended April 17.

Analysts were expecting an increase of 3 million barrels, according to a consensus estimate compiled by Platts, an energy information provider.

Oil prices rose 30 cents to settle at $48.85 a barrel Wednesday.

"At this point, it's no secret we have a lot of supply," said Phil Flynn, analyst at Alaron Trading. "Oil is following the stocks (market) pretty consistently in recent weeks."

Stocks turned slightly higher Wednesday afternoon. Oil investors look to the U.S. stock market because crude is priced in dollars around the world.

The Dow Jones industrial average was up 63 points with around 45 minutes left in the session.

Oil prices were also boosted by the refinery utilization rate, which rose by 3 percentage points to 83.4% of capacity. Analysts expected 81.45%.

A higher run rate signals an expectation of more upcoming demand, Flynn said.

Gasoline: Stockpiles of gasoline jumped by 800,000 barrels, while analysts predicted a decrease of 860,000 barrels.

The national average price for a gallon of regular unleaded gasoline increased for the fifth consecutive day to $2.062, up from the previous day's $2.06, according to survey results released Wednesday by motorist group AAA.

That's down $2.052, or 49%, from the record high price of $4.114 in July.

The EIA report also said distillates, which are used to make heating oil and diesel fuel, increased by 2.7 million barrels. Analysts expected distillate supplies to fall by 1.25 million barrels.

Outlook: For the foreseeable future, oil prices will be "driven by the fortunes of the stock market," Flynn said.

Crude has hovered near both sides of the $50 mark, and it should rise amid mild but growing optimism about the economic recovery, Flynn said.

"Barring any major news, the stock market should creep higher on that optimism," he said. "And when the mood is better for stocks, the oil market is happy."