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Crude prices climb past US$41 with hopes for stimulus bill passage in Senate

OIL prices pushed past US$41 a barrel yesterday after languishing for most of the day near US$40, on hopes the Obama administration's economic stimulus plan would soon clear the Senate.

Senate Democratic leaders said they hoped for passage of the legislation by Friday, and prospects appeared to hinge on agreement to a series of changes that would trim the size of a bill costing well over US$920 billion.

Light, sweet crude for March delivery rose 85 cents to settle at US$41.17 a barrel on the New York Mercantile Exchange.

Earlier, discouraging economic news made traders wary and kept oil prices just above US$40. The Labor Department reported the number of laid-off workers seeking jobless benefits rose last week to a seasonally adjusted 626,000, the highest number since October 1982 when the economy was in a deep recession.

The total compared with last week's 591,000 claims and was higher than analysts' expectations of 583,000.

The number of people remaining on the unemployment compensation rolls increased slightly to nearly 4.8 million, the most since records began in 1967.

Separately, the Commerce Department said factory orders, ranging from autos to computers, fell by 3.9 percent in December.

Layoffs sent more people to unemployment lines. Cosmetics maker Estee Lauder Cos. said it would cut 2,000 employees, or 6 percent of its work force, as part of a four-year restructuring program.

Retailers reported another round of lackluster sales figures for January; Cisco Systems Inc. and Deutsche Bank AG had gloomy quarterly earnings reports.

The government's Energy Information Administration said in its weekly report that natural gas inventories held in underground storage in the lower 48 states fell by 195 billion cubic feet to about 2.18 trillion cubic feet for the week ended Jan. 30.

Analysts expected a drop of between 193 billion and 198 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

The Organization of Petroleum Exporting Countries has tried to reduce output by 4.2 million barrels since September, and the group's leaders have said the cartel could announce more production cuts at its next meeting in March.

Mike Zarembski, a senior commodity analyst at OptionsXpress Inc. in Chicago, said gas prices appear to be stabilizing somewhat which should benefit consumers.

"As long as we're starting to see some stability there, I think maybe the consumer will be able to start planning his gasoline expenditures and knowing the prices are not going to swing wildly day to day," he said.

In other Nymex trading, gasoline futures rose 5.64 cents to settle at US$1.2748 a gallon. Heating oil added 4.02 cents to settle at US$1.3672 a gallon, while natural gas for March delivery gained 4.5 cents to settle at US$4.642 per 1,000 cubic feet.

In London, the March Brent contract rose US$2.31 to settle at US$46.46 on the ICE Futures exchange.


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