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Oil rises on economic reports

OIL prices rose above US$79 a barrel yesterday as news of stronger regional manufacturing and other upbeat economic reports offset concerns about unemployment.

Benchmark crude for March delivery added US$1.73 to settle at US$79.06 a barrel on the New York Mercantile Exchange. That's the highest settlement for oil in more than a month.

In London, Brent crude increased US$1.51 to settle at US$77.78 a barrel on the ICE futures exchange.

Oil prices have been rising this week with further signs of economic growth. One day after the government reported gains in industrial production and home construction, the Philadelphia Federal Reserve said manufacturing is improving. Its manufacturing index rose to 17.6 in February from 15.2 in January.

Earlier yesterday, the Labor Department said the number of Americans seeking unemployment benefits for the first time rose 31,000 to 473,000 last week. Economists polled by Thomson Reuters forecast claims would fall to 430,000. Unemployment is a major obstacle to a sustained recovery.

Crude has traded between US$69 a barrel and US$84 for most of the last six months as the global economy recovers from recession, but crude demand from developed countries remains weak.

Meanwhile, crude oil and gasoline supplies rose last week, the US government said yesterday.

Crude inventories rose by 3.1 million barrels, or 0.9 percent, to 334.5 million barrels. That was 5.4 percent below year-ago levels, the Energy Department's Energy Information Administration said in its weekly report.

Natural gas prices tumbled nearly 4 percent after the government said supplies are still higher than average despite a rash of snowstorms that blanketed the East Coast during the past few weeks.

Natural gas is used to both heat US homes and power electric generators, and supplies generally drop in the winter as homeowners crank up the heat.

The Energy Information Administration said natural gas stores did fall last week. However the remaining supply of 2.03 trillion cubic feet is still nearly 3 percent higher than the five-year average.

Natural gas lost 21.4 cents to settle at US$5.172 per 1,000 cubic feet.

In other Nymex trading in March contracts, heating oil added 4.49 cents to settle at US$2.0516 a gallon, and gasoline rose 6.21 cents to settle at US$2.0692 a gallon.


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