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Oil higher as OPEC sees oil demand staying strong

Oil higher as OPEC sees oil demand staying strong

Oil rose Tuesday as OPEC and the U.S. Energy Information Administration held onto their views that the global appetite for oil will grow to record levels this year despite a shaky global economic recovery.
Benchmark West Texas Intermediate crude for August delivery rose $1.37 to $96.52 per barrel in afternoon trading on the New York Mercantile Exchange.
Brent crude, which is used to price many international oil varieties, fell 18 cents to $117.06 per barrel on the ICE Futures exchange in London.
Analysts and investors pay particular attention to world demand forecasts. The expectation that China and other developing nations will keep using more crude has supported prices this year despite weak gasoline consumption in the U.S. and a festering credit crisis in Europe that has raised concerns about international demand for oil.
While OPEC thinks global demand will continue to increase this year to the highest levels ever, the monthly report it released Tuesday said that demand won't grow as much as it previously expected. The cartel said daily world consumption will increase this year by 1.36 million barrels _ down from an earlier estimate of 1.38 million barrels _ to an average 88.18 million barrels.
OPEC said it cut demand expectations "as the unsteady global economy has added risks to the forecast." The report also said it's hard to estimate how much oil the U.S. will consume this year. Gasoline consumption fell ahead of the summer driving season as retail prices approached a national average of $4 per gallon ($1.05 a liter). A gallon of regular has since dropped by nearly 35 cents to a national average of $3.636 on Tuesday, according to AAA, Wright Express and Oil Price Information Service. It's still 92.1 cents higher than the same time last year.
The U.S. Energy Information Administration said Tuesday that it expects oil demand to increase 1.6 percent this year to a record 88.16 million barrels per day, nearly same as the OPEC forecast. The EIA said global oil production won't be enough to satisfy demand. The U.S. and other countries will need to keep dipping into spare supplies in coming years, the EIA said.
Meanwhile, the Labor Department said Tuesday that job openings were flat in May, suggesting that hiring may not pick up this summer. The U.S. trade deficit also jumped in May to the highest level since October 2008, primarily because of a surge in the price of oil imports at that time.
In Europe markets slumped on fears that Greece's financial crisis would spread to Italy and Spain. However, the dollar dropped from highs set earlier in the day after Italy promised to speed up cost-cutting measures. Oil, which is priced in U.S. currency, tends to rise as the dollar declines and makes crude cheaper for investors holding foreign money.
In other Nymex trading for August contracts, heating oil lost a penny at $3.0822 per gallon and gasoline futures rose 1 cent to $3.0807 per gallon. Natural gas gained 5 cents at $4.327 per 1,000 cubic feet.


Updated : 2021-02-28 08:55 GMT+08:00