Oil rose on Thursday, as the dollar weakened and gas pump prices inched higher. Benchmark West Texas Intermediate crude added 84 cents to settle at $112.29 per barrel on the New York Mercantile Exchange. In London, Brent crude rose 14 cents to settle at $123.99 per barrel.
At one point on Thursday the dollar dropped to a 16-month low against the euro. Since oil is priced in dollars, it becomes more attractive to buyers holding foreign currency as the dollar gets weaker. The dollar’s been falling as investors remain convinced the Federal Reserve will keep interest rates near zero. Lower rates make the dollar less attractive.
Energy traders keep looking for signs that demand for oil and gas will increase as the global economic recovery continues. Analysts at Barclays Capital think they need not look far. “We continue to believe that the top for crude oil prices this year is not yet in,” they wrote in a note to investors. “Oil demand indications remain very strong … Chinese demand is still increasing at a rate faster than 1 million barrels per day.”
China is the world’s second largest oil consumer behind the U.S. Although China continues to try to slow its booming economy to keep inflation under control, demand for energy remains strong. China needs about 9.2 million barrels a day, according to Platts. Demand is up 10.5 percent from a year ago, but it’s only about half of U.S. daily oil consumption.
Hopes for rising demand also got a boost Thursday from positive U.S. economic news. Along with upbeat earnings reports from companies like GE and Apple, The Conference Board’s index of leading economic indicators rose for the ninth consecutive month. And the Labor Department said weekly claims for unemployment benefits dropped after a sharp jump the previous week.
The national average for a gallon of regular gas was virtually unchanged on Thursday at $3.84 for a gallon of regular. That’s about 30 cents higher than a month ago and almost a dollar higher than a year ago.
The Energy Department reported that the nation’s natural gas supplies rose again last week, but not as much as analysts expected. Natural gas supplies are 9.1 percent below year-ago levels and 1.4 percent above the five-year average. Natural gas rose 10.2 cents, or 2.4 percent, to settle at $4.412 per 1,000 cubic feet on the Nymex.
Heating oil lost 2.22 cents to settle at $3.1992 per gallon and gasoline futures rose 3.13 cents to settle at $3.3086 per gallon.
Source : news.yahoo.com