May crude oil rises 44 cents to $26.31 a barrel in New York

Stronger economy stirs demand for energy

March 29, 2002|By BLOOMBERG NEWS

NEW YORK -Crude oil rose to a six-month high on expectations of stronger demand, after reports signaled that the United States is quickly recovering from last year's recession.

The U.S. economy expanded at a 1.7 percent annual pace from October to December, up from a previous estimate of 1.4 percent, the Commerce Department said. The University of Michigan's consumer-sentiment index rose to a 15-month high of 95.7 in March from 90.7 in February.

Economic growth will lead to greater demand for gasoline, diesel and industrial fuels, analysts said.

"These economic statistics make it clear that demand will be strong," said Phil Flynn, a senior trader at Alaron Trading Corp. in Chicago. "The U.S. recovery is now well under way and that has to be supportive for oil."

Crude oil for May delivery rose 44 cents, or 1.7 percent, to $26.31 a barrel on the New York Mercantile Exchange, the highest closing price since Sept. 20. Oil rallied 33 percent this quarter and gained 3.8 percent this week.

The exchange is closed today for Good Friday.

In London, Brent crude oil for May settlement rose 48 cents, or 1.9 percent, to $25.92 a barrel on the International Petroleum Exchange. Prices rose 2.2 percent this week. London markets are closed today and Monday.

While petroleum demand may be rising, U.S. petroleum inventories are falling. Supplies of crude oil, gasoline, and distillate fuels all fell last week, the American Petroleum Institute reported Tuesday.

Gasoline supplies fell 1 percent to 205 million barrels, narrowing a year-on-year surplus to 4.4 percent from 6.3 percent reported a month ago. Gasoline stockpiles normally increase this time of year as refineries make fuel for the peak-demand summer vacation season.

Refineries operated at 86.3 percent of their capacity last week, 3.2 percentage points lower than a year earlier, the API report showed.

Gasoline for April delivery rose 0.44 cent to 82.49 cents a gallon on the New York exchange. Prices were up 3 percent this week. Futures surged 44 percent during the quarter.

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