Energy stocks surge on hopes for oil deal, sending market higher

NEW YORK (AP) - Energy companies powered to big gains Wednesday, leading the broader stock market higher, on reports that OPEC nations were moving closer to an agreement to cut oil production.

Stocks switched between gains and losses for most of the day, and most industries did not move much. Energy companies surged at 2 p.m. Eastern time on reports that a deal was close. A two-year slump in oil prices has decimated profits at energy companies. The energy sector made its biggest gain since January.

After stock trading closed, OPEC said it had reached a preliminary deal to reduce production for the first time in eight years.

The Dow Jones industrial average rose 110.94 points, or 0.6 percent, to 18,339.24. The Standard & Poor's 500 index added 11.44 points, or 0.5 percent, to 2,171.37. The Nasdaq composite edged up 12.84 points, or 0.2 percent, to 5,318.55.

A little more than two years ago, a barrel of oil cost around $100. But a huge supply glut built up as the U.S. and other countries produced more and more oil and the global economy slowed, which hurt demand. Oil hit a low of $26 a barrel in February and has traded between $40 a $50 a barrel since April, but investors doubt the price will rise further without limits on production. OPEC produces more than a third of the world's oil.

"The industry needs higher oil prices," said Youngberg.

Benchmark U.S. crude jumped $2.38, or 5.3 percent, to $47.05 a barrel in New York. Brent crude, the international standard, rose $2.72, or 5.9 percent, to $48.69 a barrel in London.

Exxon Mobil picked up $3.66, or 4.4 percent, to $86.90 and Chevron leaped $3.17, or 3.2 percent, to $102.15.

Oil prices jumped 3 percent Monday and then fell 3 percent Tuesday as hopes for a production deal rose and fell, and oil repeatedly changed course Wednesday as well.