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Crude falls as dollar gains strength

BENCHMARK crude for July delivery fell US$1.42 to settle yesterday at US$70.62 a barrel on the New York Mercantile Exchange as the dollar gained strength.

On Friday, crude fell 64 cents to settle at US$72.04.

Energy prices, like some other commodities, had been rising fast on speculation that the U.S. economy is recovering from its longest recession since World War II. But they reversed course late last week as worries surfaced over the recovery's durability.

Meanwhile, a recovering dollar also has given traders a reason to move out of commodities, which are often used to hedge against a weakening U.S. currency.

The dollar mostly rose yesterday after the Russian finance minister voiced his support for the currency, even as the U.S. government said foreigners' dollar-denominated holdings fell in April.

Sliding stock markets also fueled dollar buyers.

Also yesterday, U.S. gas prices rose for the 48th straight day, matching a record going back to at least the 1970s, with prices now up nearly two-thirds since the beginning of the year even as demand for gas remains weak.

Prices at the pump rose 0.6 cents to US$2.669 a gallon, according to auto club AAA, Wright Express and Oil Price Information Services. Prices are a nickel above where they were a week ago and 30.8 cents above month-ago levels, but remain US$1.408 below year ago levels.

Consumers are now paying about US$1 billion a day for gasoline compared with about US$600 million a day over New Year's weekend and US$1.5 billion a day or more a year ago, according to Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

The more than 60 percent increase in prices so far this year exceeds anything going as far back as the 1970s, Kloza said.

The good news is that prices look like they may be peaking. Wholesale gasoline prices in the Chicago area have fallen about 30 cents a gallon from just 10 days ago, he said.

In other Nymex trading, gasoline for July delivery rose less than a penny to settle at US$2.053 a gallon and heating oil fell 2.2 cents to settle at US$1.8156. Natural gas for July delivery jumped 32.5 cents to settle at US$4.182 per 1,000 cubic feet.

In London, Brent prices fell US$1.48 to settle at US$69.44 a barrel on the ICE Futures exchange.


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