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Oil prices near US$65 per barrel on better earnings

OIL traded near US$65 a barrel yesterday as a raft of better-than-expected profit reports boosted optimism that demand for crude would rebound.

Energy prices, except for retail gasoline, have been rising for a week. Yet it was the second day that prices crisscrossed US$64, with lingering doubts about the ability of businesses or consumers to step up consumption.

Benchmark crude for August delivery rose 74 cents to settle at US$64.72 a barrel on the New York Mercantile Exchange. That's more than US$5 above last yesterday's closing price.

It was the last day of trading for the August futures contract and part of the price increase over the past week may be the result of traders covering strategic bets on the direction of oil.

Tuesday's closing price is still several dollars below the closing of the July contact.

Heavy equipment marker Caterpillar Inc. was among companies that issued an improved 2009 profit forecast on yesterday, even as it said its second-quarter profit fell 66 percent on weak sales. Coca-Cola Co.'s second-quarter profit rose 43 percent.

Chemical maker DuPont Co. and drug company Merck & Co. said their profits fell, but the results weren't as bad as Wall Street had expected.

Still, Jim Ritterbusch of Ritterbusch and Associates said demand for gasoline, diesel fuel, heating oil and natural gas is remains weak and drivers still are not hitting the road, even with gasoline prices well below year-ago levels.

Pump prices have fallen for a month now, and headed lower overnight once again.

Retail gasoline prices fell 0.7 cents to US$2.458 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. That's almost a quarter less than last month at this time and far below last year's price, when US$4 gasoline gave motorists sticker shock in the U.S.

On Wednesday, the Energy Department's Energy Information Administration releases its weekly report on how much crude and gasoline is in storage.

Gasoline supplies, as well as diesel fuel, are expected to rise again as the busiest part of the driving season winds down.

In other Nymex trading, gasoline for August delivery rose 2.26 cents to settle at US$1.812 a gallon and heating oil gained almost a penny to settle at US$1.6984. Natural gas for August delivery also rose just short a cent to settle at US$3.846 per 1,000 cubic feet.

In London, Brent prices rose 43 cents to settle at US$66.87 a barrel on the ICE Futures exchange.


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