CRUDE OIL RISES ON BETS US RECOVERY WILL BOOST FUEL DEMAND
Crude oil rose on speculation that economic growth in the United States, the world's biggest energy consumer, will sustain a global recovery in fuel demand, Bloomberg reported on Monday.
Oil climbed above $74 a barrel in New York after Federal Reserve Bank of Chicago, President Charles Evans, said the US economic recovery would continue amid uncertainties prompted by Europe's debt crisis.
About 28 million people were expected to be on road trips in the US during the three-day Memorial Day weekend, a jump of 5.8 per cent from a year earlier and the first increase since 2005, according to AAA, the country's biggest motoring organisation.
'Gasoline consumption has been on the rise recently, and Memorial Day in the US officially marks the beginning of the driving season, which normally leads to higher demand,' Eugen Weinberg, Head of Commodity Research with Commerzbank AG in Frankfurt, Eugen Weinberg, said. 'Also the continuing struggle with the oil spill in the Gulf of Mexico is supporting the prices,' he added.
Crude oil for July delivery rose as much as 71 cents, or one per cent, to $74.68 a barrel in electronic trading on the New York Mercantile Exchange. It was at $74.49 at 9.55am in London. Oil futures are down 14 per cent in May, the biggest monthly drop since December 2008. Floor trading is closed today for the Memorial Day holiday in the US Electronic trades will be booked to tomorrow for settlement purposes.
Brent crude for July settlement gained as much as 70 cents, or one per cent, to $74.72 a barrel on the ICE Futures Europe exchange. It was at $74.63 a barrel at 9.55am in London.
US gasoline demand usually peaks June through August as motorists take to the roads for summer holidays. Gasoline stockpiles fell for a third week last week to 221.6 million barrels, 5.8 per cent above the five-year average level, the Energy Department said last week.
Crude oil inventories climbed for the 16th time in 17 weeks to reach 365.1 million barrels. Refiners cut processing rates even as imports increased.
BP Plc will use undersea robots to begin cutting damaged pipe from its leaking oil well off Louisiana as early as Monday, risking temporarily increasing the flow as it makes another attempt to end the largest oil spill in U.S. history. A blowout on April 20 destroyed Transocean Limited's Deepwater Horizon drilling rig in the Macondo oil field in the US Gulf Coast.
Reports this week will probably show US payrolls increased in May while factories continued to expand. Gains in manufacturing may be accompanied by a rebound among service industries, which make up about 90 per cent of the economy, based on a Bloomberg News survey of economists.