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Energy prices bounce back

ENERGY prices resumed their climb into summer driving season yesterday, a show of confidence that Americans will overlook dismal economic news as they head out on their Memorial Day weekend trips.

Benchmark crude for June delivery jumped US$2.69 to settle at US$59.03 a barrel on the New York Mercantile Exchange after dropping US$2.28 Friday to US$56.34.

With the June Nymex contract expiring today, the market was also keeping close tabs on the July contract, which rose US$2.59 to settle at US$59.59.

U.S. retail gasoline prices inched up again overnight to a new national average of US$2.311 for a gallon (61 cents a liter) of regular unleaded, according to auto club AAA, Wright Express and Oil Price Information Service.

That's their highest level since early November, and about 71 cents per gallon above where retail gas ended 2008.

"The economic recovery may come down to miles per gallon as the market is trying to gauge where we are at in this economic recovery," Alaron Trading Corp. analyst Phil Flynn wrote.

A series of reports calling for even less global energy demand last week undercut optimism that a widespread economic recovery was imminent. The International Energy Agency, the U.S. Energy Information Administration and the Organization of Petroleum Exporting Countries all slashed crude demand expectations.

The outlook for the U.S. economy also turned darker last week after dismal news on unemployment and housing. Retail sales fell unexpectedly last month.

Issues that would have had consumer paying more for gas and other fuels last year do not pack the same punch this deep into a recession.

There was also an overnight explosion at a Delaware oil refinery, but it occurred at the refinery's ethylene complex. Flynn said he doesn't think it will have a major effect on oil prices.

"It would be more of a concern if we didn't have so much spare capacity and excess oil out there," Flynn said.

In London, Brent prices rose US$2.49 to settle at US$57.47 a barrel on the ICE Futures exchange.

In other Nymex trading, gasoline for June delivery jumped 7.75 cents to settle at US$1.7581 a gallon and heating oil gained 5.7 cents to settle at US$1.4757 a gallon. Natural gas for July delivery rose 4.8 cents to settle at US$4.265 per 1,000 cubic feet.


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