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Oil nears $54 on indications demand is up overseas

Oil nears $54 on indications demand is up overseas

Signs of increasing energy demand in China, the world's second largest consumer, pushed oil up to near $54 a barrel Monday, but concerns over the state of the economic recovery and the spread of the swine flu continue to hold prices in check.
Benchmark crude for June delivery gained 42 cents to $53.62 a barrel on the New York Mercantile Exchange after settling at $53.20 on Friday.
In the summer of 2008, surging demand from countries like China and India affected almost everyone's pocketbook, with retail gasoline prices skyrocketing.
"There's nothing more bullish for oil than the Chinese manufacturing sector expanding," said Phil Flynn, an analyst at Alaron Trading Corp.
China's monthly survey of purchasing managers for more than 700 manufacturers _ a key indicator _ rose to 53.5 in April from March's 52.4, the government-sanctioned China Federation of Logistics and Purchasing reported Friday.
Still, for most consumers, it's a completely different energy landscape heading into this summer.
U.S. retail gasoline is nearly 43 percent cheaper now than it was last May and natural gas, used to heat and cool homes, is close to seven-year lows.
People are already driving much less than they were last year, even when gasoline prices were soaring. Now fears of a pandemic may be affecting consumer travel, and that could pressure fuel prices further.
Over the weekend, pigs on a Canadian farm were infected with the new swine flu virus _ possibly by a farm worker back from Mexico, health officials said.
"That did raise a concern a little bit, and I think oil traders were on guard that people would just get back into that hunker-down-and-not-travel mode," Flynn said.
Oil has traded around $50 during the past month or so, about a third of its record high in July, as the global economy remains weak.
Because of the fallout from the recession, energy prices are being heavily influenced by economic data.
The U.S. government on Thursday will release its assessment of the health of 19 big banks.
April employment data is due out Friday. American employers cut 663,000 jobs in March sending the unemployment rate up to 8.5 percent, the highest level in more than 25 years.
Natural gas prices, which have been plummeting for months as factories cut production and jobs, actually rose 7.5 cents to
Natural gas for June rose 7.5 cents to $3.621 per 1,000 cubic feet, but it has fallen faster than even crude prices.
Trader and analyst Stephen Schork maintains that oil markets draw more speculators, and that natural gas prices are a better gauge of the economy.
"In other words, crude oil is extremely overbought compared with natural gas," Schork said in his daily report.
The Organization of Petroleum Exporting Countries meets May 28 to discuss a potential production cut. OPEC has announced 4.2 million barrels a day of output quota reductions since September, but left production levels unchanged at its last meeting in March.
In other Nymex trading, gasoline for June delivery gained nearly 3 cents to about $1.55 a gallon and heating oil rose 3.3 cents to $1.42 a gallon.
In London, Brent prices rose $1.01 to $53.86 a barrel on the ICE Futures exchange.
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Associated Press Writers Alex Kennedy in Singapore and George Jahn in Vienna contributed to this report.


Updated : 2021-08-03 09:41 GMT+08:00