Global Biz

Oil above $112 on signs of strong US crude demand

(Agencies)
Updated: 2011-04-21 14:44

SINGAPORE - Oil prices jumped above $112 a barrel Thursday in Asia to near the highest level since 2008 amid signs US demand remains robust despite rising fuel costs.

Benchmark crude for June delivery was up 78 cents at $112.24 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.

In London, Brent crude for June delivery was up 79 cents to $124.64 a barrel on the ICE Futures exchange.

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Oil prices surged $3.17 to settle at $111.45 on Wednesday as falling crude and products supplies suggested a two-month rally hasn't deterred consumer spending.

The Energy Information Administration reported that US oil supplies shrank by 2.3 million barrels last week while analysts had expected an increase of 1.6 million barrels. The EIA said inventories of gasoline and distillates also fell.

Oil is up about 33 percent since mid-February and reached $113.46 during trading April 11, the highest since September 2008.

Better than expected US housing sales last month, a weakening dollar and a 1.5 percent jump by the Dow Jones industrial average also helped push oil prices higher Wednesday.

Improving economic data from developed countries and investor concern crude supplies could be disrupted in the Middle East and North Africa should keep oil prices well above $100 this year, said Ben Westmore, an energy analyst with National Australia Bank.

"The risk premium currently factored into oil prices is expected to persist through 2011," Westmore said. He expects benchmark crude to average $116 in the fourth quarter.

In other Nymex trading in May contracts, heating oil rose 0.3 cent to $3.22 a gallon and gasoline gained 0.4 cent at $3.28 a gallon. Natural gas futures were up 0.6 cent at $4.32 per 1,000 cubic feet.