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Crude prices follow stock market higher

OIL prices appeared to take their cue again from the stock market, pushing higher yesterday even as new data suggests any economic rebound that might spark demand for gas or other fuels may take some time.

Benchmark crude for June delivery rose 62 cents to settle at US$59.65 a barrel on the New York Mercantile Exchange after hitting as high as US$60.48. With the June contract expiring yesterday, however, most traders were focused on the July contract, which rose 51 cents to settle at US$60.10.

Oil prices moved into positive territory by afternoon along with major indexes. Oil prices and the stock market have been moving higher for the past several weeks on the idea that the longest recession since World War II is coming to an end and that the economy - along with energy demand - will begin to rebound this year.

But at the same time, energy companies have been forced to cut back on spending following the crash in oil and natural gas prices. Enormous supplies of unwanted crude and gasoline have led to huge bargains, particularly noticeable at the pump.

There appears to be some tightening in supplies recently, with imports slowing and refiners cutting production.

While compared to last year prices are still low, they have begun to creep upward.

Retail gasoline prices have risen every day this month after lingering below US$2 a gallon from December through most of March.

The government will report today how much crude and gasoline is in storage, numbers that can move energy prices up or down depending on what the market is expecting.

Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., are expecting oil stocks, which are at 19-year highs, to fall for a second consecutive week. Analysts also are looking for gasoline stocks to fall.

In other Nymex trading, gasoline for June delivery rose 5.44 cents to settle at US$1.8125 a gallon and heating oil rose 1.09 cents to settle at US$1.4866 a gallon. Natural gas for July delivery fell 23.5 cents to settle at US$4.03 per 1,000 cubic feet.

Brent crude rose 45 cents to settle at US$58.92 a barrel on the ICE Futures exchange in London.


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