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August 24, 2009

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Crude climbs on hopeful data

OIL rose nearly US$1 toward US$74 a barrel to settle at a 10-month high last Friday as data in the United States promised economic recovery and a potential revival in energy demand.

US crude for October delivery settled up 98 cents at US$73.89 per barrel, the highest settle since October 20. London Brent crude for October settled up 86 cents at US$74.19.

Crude rose US$6.38 over the week, nearly 10 percent, from the US$67.51 settle on August 14.

"The primary source of support again tended to be spillover from the financial space that included a weakening dollar and associated strengthening in the stock indexes," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.

The US dollar was down against the euro, helping to support commodity prices, with investors showing some appetite for risk. Home sales data for last month showed recovery in the US housing market, while Federal Reserve Chairman Ben Bernanke said that the global economy appears to be recovering.

The US National Association of Realtors said sales of previously owned homes jumped 7.2 percent last month, the fastest sales pace in nearly two years.

US equities rose last Friday, sending the S&P 500 index to a 10-month intraday high on economic optimism.

Tighter regulation of the energy market may take the edge off high prices, Commerzbank said in note last Thursday.

"The significant rise in the oil price in the first half of the year is due in large part to a recovery in investment by financial investors," analyst Eugen Weinberg at Commerzbank wrote in their Commodities Spotlight Energy newsletter. "If their influence is reduced by the (Commodity Futures Trading Commission's) actions and sanity prevails, the oil price will fall."


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