Crude oil rises 84 cents to US$112.29 a barrel as greenback weakens

NEW YORK, N.Y. - Crude oil prices rose on Thursday, as the dollar weakened and gas pump prices inched higher.

Benchmark West Texas Intermediate crude added 84 cents to settle at US$112.29 a barrel on theNew York Mercantile Exchange. In London, Brent crude rose 14 cents to settle at US$123.99 per barrel.

At one point on Thursday the U.S. dollar dropped to a 16-month low against the euro. Since oil is priced in dollars, it becomes more attractive to buyers holding other currencies as the dollar gets weaker.

The value of the greenback has been falling as investors remain convinced the U.S. Federal Reserve will keep interest rates near zero. Lower rates make the dollar less attractive.

Energy traders keep looking for signs that demand for oil and gas will increase as the global economic recovery continues. Analysts at Barclays Capital think they need not look far.

"We continue to believe that the top for crude oil prices this year is not yet in," they wrote in a note to investors. "Oil demand indications remain very strong ... Chinese demand is still increasing at a rate faster than one million barrels per day."

China is the world's second-largest oil consumer behind the United States. Although China continues to try to slow its booming economy to keep inflation under control, demand for energy remains strong. China needs about 9.2 million barrels a day, according to Platts. Demand is up 10.5 per cent from a year ago, but it's only about half of U.S. daily oil consumption.

Hopes for rising demand also got a boost Thursday from positive U.S. economic news. Along with upbeat earnings reports from companies like GE and Apple, the Conference Board's index of leading economic indicators rose for the ninth consecutive month. And the U.S. Labour Department said weekly claims for unemployment benefits dropped after a sharp jump the previous week.

The U.S. Energy Department reported that the nation's natural gas supplies rose again last week, but not as much as analysts expected. Natural gas supplies are 9.1 per cent below year-ago levels and 1.4 per cent above the five-year average. Natural gas rose 10.2 cents, or 2.4 per cent, to settle at US$4.412 per 1,000 cubic feet on the Nymex.

Heating oil lost 2.22 cents to settle at US$3.1992 a U.S. gallon (3.78 litres) and gasoline futures rose 3.13 cents to settle at US$3.3086 a gallon.

(Source: http://ca.news.yahoo.com/oil-rises-above-us-112-europe-signs-rising-120832282.html)