Investors skittish
over oil supplies

NEW YORK » Wall Street scratched out its third straight minuscule gain yesterday as investors fretted over rising oil prices and disappointing inventory data from the Energy Department. Analysts attributed the gain to a calming assessment of the economy by the Federal Reserve.

The surprise decline in domestic crude supplies overshadowed a 0.1 percent drop in the government's consumer price index. It was the first decline in 10 months for the index, which encouraged investors, but analysts said soaring energy costs -- which might contribute to inflation in the months ahead -- were a drag on stocks.

"We had positive economic data across the board," said Arthur Hogan, chief market analyst at Jefferies & Co. "The headwinds are higher energy prices."

The Dow Jones industrial average rose rose 18.80, or 0.2 percent, to 10,566.37 after modest gains Monday and Tuesday.

Broader stock indicators also rebounded. The Standard & Poor's 500 index rose 2.67, or 0.2 percent, to 1,206.58. The Nasdaq composite index rose 5.88, or 0.3 percent, to 2,074.92.

Bonds rebounded from earlier losses. The yield on the 10-year Treasury note was 4.10 percent, down from 4.11 percent Tuesday. The dollar was lower against other major currencies. Gold prices rose.

In its weekly update on fuel supplies, the government reported an unexpected 1.8 million barrel draw on crude, a deeper decline than analysts expected, as well as a drop in gasoline. The inventory data eclipsed OPEC's announcement that it would increase production by 500,000 barrels later this year if prices don't fall. Analysts said OPEC's decision was largely symbolic and would have little impact on actual output. Light, sweet crude rose 57 cents to settle at $55.57 per barrel on the New York Mercantile Exchange, giving up some of its earlier gains.

Though retreating energy prices in past months were credited for the drop in the Labor Department's CPI reading, the short-term surge in crude sent stock buyers fleeing. Still, with market watchers worried about interest rates and inflation still a primary concern of the Federal Reserve, the improved CPI raised hopes that the central bank will be less aggressive with its rate policy.

The Fed's Beige Book assessment of the nation's economy, released at midday, was also was consistent with "the Goldilocks economy," said Alexander Paris, an economist and market analyst for Chicago-based Barrington Research.