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Energy prices fall before crude storage report

Energy prices fall before crude storage report

Oil prices retreated from five-month highs Tuesday, a day before the U.S. government is expected to report crude storage levels have reached a new 19-year high.
Benchmark crude for June delivery fell 74 cents to $53.73 a barrel on the New York Mercantile Exchange after jumping $1.27 on Monday to $54.47 _ the market's highest close since Nov. 26.
Still crude prices have risen nearly 8 percent since last Tuesday and gas prices have begun to tick upward as the driving season approaches and as refineries cut back on production.
Oil has traded near $50 for more than a month as the worst global slump in decades undermined energy demand. Hints of an economic recovery have pushed prices higher in recent weeks.
Federal Reserve Chairman Ben Bernanke told Congress Tuesday that the U.S. economy should exit the recession and begin to grow later this year. That could lead to a rebound in energy prices.
Dour economic reports have outweighed the positive for months, however, and part of the reason energy prices have been sustained at the current level is the weak dollar. Crude is priced in dollars, which makes it cheaper to buy when the dollar falls.
The U.S. currency has been weakened by the massive government bailout of banks and automakers.
The dollar fell less than a penny against the euro Tuesday, but is down about 6 cents compared with the beginning of the year.
"Maybe it as simple as the fact that oil has more dollar value in a world where the U.S. government is running up a debt of historic proportions," analyst Phil Flynn said in a client note.
That would go a long way to explain why energy prices are not falling even further.
As trader and analyst Stephen Schork wrote Tuesday, "You can't swing a cat without hitting a barrel of crude oil."
The Energy Information Administration's weekly report on crude in storage is expected to show a continued build up on Wednesday for the week ending May 1.
Crude stocks rose 4.1 million barrels last week and the Strategic Petroleum Reserve has hit record levels and continues to grow, Schork noted.
Refiners have slashed production, so they are not taking in as much oil. That has led to some comparatively cheap gasoline, though prices are up slightly at the pump because of the cutbacks.
A gallon of regular U.S. unleaded gasoline is about $1.53 a gallon cheaper than it was last year at this time.
In other Nymex trading, gasoline for June delivery fell less than a penny to $1.578, while heating oil fell 2 cents to $1.4165 a gallon. Natural gas for June delivery dropped 12 cents to $3.60 per 1,000 cubic feet.
In London, Brent prices fell 45 to $54.13 a barrel on the ICE Futures exchange.
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Associated Press Writer Alex Kennedy in Singapore and George Jahn in Vienna contributed to this report.


Updated : 2021-04-19 00:01 GMT+08:00