Airline stocks have accelerated higher Tuesday morning. The buying interest has been triggered by tumbling oil prices.
Among the sector leaders are shares of Northwest Airlines Corp. (NWA), UAL Corp. (UAUA), Delta Air Lines Inc. (DAL) and Continental Airlines Inc. (CAL), which are all posting gains of about 15%.
Around 10:55 am Eastern Time, Northwest stock was up $1.51 at $11.29 a share, while UAL Corp. shares were up $1.59 at $12.70. Shares of Delta were up $1.19 ay $9.32 and CAL stock was up $2.16 at $18.41.
Shares of AMR Corp. (AMR) and UA Airways Group (LCC) have also risen over 10%. Meanwhile, JetBlue Airways Corp. (JBLU), TAM S.A. (TAM) and Southwest Airlines Inc. (LUV) are also posting notable gains.
Crude oil plunged on Tuesday as Gustav weakened without causing the damage many had feared. Light sweet crude moved to $108.33, down $6.63 on the session. Oil fell to a fresh multi-month low of $105.46 in electronic trading.
Surface observations over Louisiana indicate that Hurricane Gustav has weakened below tropical storm strength, according a statement released Tuesday morning by the National Weather Service Hurricane Center. New Orleans was spared a direct hit as the storm arrived on Monday and the oil region was also escaped with minimal damage.
While Gustav has faded away, more weather problems may be on the way. Tropical Storm Hannah will lash the Bahamas and is expected to head toward Florida and up the southeast coast of the US. Meanwhile, Tropical Storm Ike formed between Africa and the Caribbean and is forecasted to cause major problems later this week.
Oil closed slightly lower on another choppy day of trading on Friday, losing 13 cents. Crude prices turned sharply lower on Thursday as the International Energy Agency has pledged to release additional oil supplies in the event of storm damage. After it had earlier hit as high as $120.50, oil ended at $115.59, down $2.56 on the session.
Traders also await the Department of Energy's weekly inventory report, which will be released on Thursday this week because of the Labor Day break.
The hedge value for commodities continued to decrease as the greenback moves higher. The dollar jumped to a 7-month high versus the euro amid the release of data showing a slower-than-expected PPI increase in the Euro zone. The greenback added to a 2 1/2 year high against the sterling.
After the closing bell on Friday, American Airlines, a subsidiary of AMR Corp., said it filed a request with the United States Department of Transportation for a waiver that will allow it to begin nonstop service between Chicago O'Hare International Airport and Beijing, China, on April 4, 2010.
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