Monday, March 8, 2010

Oil maintains momentum to rise to near $82

Oil maintains momentum to rise to near $82

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Mar 8, 7:37 AM (ET)


Oil prices headed higher toward $82 a barrel Monday, extending gains from last week amid signs the global economy may be improving.

By early afternoon in Europe, benchmark crude for April delivery was up 43 cents to $81.93 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, it peaked at $82.41. The contract rose $1.29 to settle at $81.50 on Friday.

Investors were cheered by the Labor Department's February jobs report Friday, which showed the U.S. economy shed a less-than-expected 36,000 jobs last month and the unemployment rate held at 9.7 percent.

The Dow Jones industrial average jumped 1.2 percent Friday, and while most major Asian indexes rose Monday, European bourses were mostly lower.

Crude investors also took heart from news Friday that China plans to extend a stimulus package in hopes of helping the economy grow 8 percent this year.

Oil has soared 18 percent since Feb. 5 as investors become more convinced a growing global economy will boost crude demand.

Some analysts, however, said that the current rise in prices was driven by technical factors such as investors' positions in the market, not a real rise in oil consumption.

"Commodity markets often go through periods of 'disconnect' between fundamentals and the underlying technicals, and the energy markets ... are going through one of those phases right now," said Edward Meir of MF Global in New York. "We very well could retest the 2010 highs of $83.95. However, our belief is that should we get there, a rather substantial correction will set in, sending prices back into the mid-to high $70 range."

The dollar's exchange rate is often seen moving oil prices, with a weaker dollar making crude cheaper for investors holding other currencies and vice versa.

On Monday, the euro rose to $1.3652 from the $1.3624 late Friday in New York.

In other Nymex trading in April contracts, heating oil rose 0.83 cent to $2.1057 a gallon, and gasoline gained 0.78 cent to $2.2788 a gallon. Natural gas was down 8.4 cents at $4.509 per 1,000 cubic feet.

In London, Brent crude was up 58 cents at $80.47 on the ICE futures exchange.


Associated Press writer Alex Kennedy in Singapore contributed to this report.

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