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Oil and gas prices hit new high for the year

OIL and gasoline prices hit a new high for the year yestersday despite expectations that OPEC will not cut production again and more bad news arrived for the nation's automakers.

Benchmark crude for July delivery rose US$1 to settle at US$63.45 a barrel on the New York Mercantile Exchange. Prices haven't been that high since early November.

Retail gasoline prices, which are up 19 percent in the past month, rose 0.9 cents overnight to US$2.434 a gallon (64 cents a liter), according to auto club AAA, Wright Express and Oil Price Information Service. Prices are now 10 cents higher than a week ago and 38.4 cents a gallon higher than a month ago. It's also a high for the year.

There were signs of optimism about the economy, which could lead to a rebound in demand for energy.

About 74 percent of the forecasters in a survey by the National Association for Business Economics expect the recession, which started in December 2007, to end in the third quarter. Another 19 percent predict the turning point will come in the final three months of this year and the remaining 7 percent believe the recession will end in the first quarter of 2010.

Oil prices dipped below US$35 a barrel as recently as March.

Many experts say that fundamentally, there is little reason for the recent price spikes and that consumers should expect related costs to come down before the summer is over.

Major US industries continue to struggle and yesterday, a bankruptcy filing by General Motors Corp. appeared inevitable.

Jim Ritterbusch of Ritterbusch and Associates said U.S. gasoline prices could be back down to nearly US$2 a gallon by the end of summer.

"Demand is going to remain weak, and we've got plenty of excess refining capacity to crank up production," he said.

OPEC members gathered in Vienna before a meeting on Thursday. Saudi Arabian Oil Minister Ali Naimi has said the Organization of Petroleum Exporting Countries is unlikely to add to 4.2 million barrels a day of production cuts the group has announced since September.

He said that oil prices would likely reach around US$75 a barrel by the end of the year on the back of growing demand in Asia.

OPEC has cut down on the oil it produces to combat huge surpluses in supply. By some estimates, there are 100 million barrels of oil afloat at sea in tankers.

Many experts expect more buildups in storage warehouses will be revealed in a government report Thursday.

In other Nymex trading, gasoline for June delivery rose 3.93 cents to settle at US$1.8917 a gallon and heating oil rose 1.64 cents to settle at US$1.5617 a gallon. Natural gas for July delivery fell less than a penny to settle at US$3.638 per 1,000 cubic feet.

In London, Brent prices rose US$1.26 to settle at US$62.50 a barrel on the ICE Futures exchange.


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