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Oil near $102 amid weak dollar, mixed demand signs

Oil near $102 amid weak dollar, mixed demand signs

May 26th, 2011 in News

SINGAPORE (AP) - Oil prices inched higher to near $102 a barrel Thursday in Asia amid a weaker dollar and mixed signs about U.S. crude demand heading into the summer driving season.

Benchmark oil for July delivery rose 29 cents to $101.61 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract added $1.73 to settle at $101.32 on Wednesday.

In London, Brent crude for July delivery was up 7 cents at $115.00 a barrel on the ICE Futures exchange.

The Energy Department said Wednesday that oil and gasoline supplies in the U.S. grew last week while distillate inventories fell. Four-week average oil demand in the U.S. dropped 5.3 percent, while gasoline demand fell 2.1 percent, the department said.

"Our biggest concern here is that economic data is poor," Cameron Hanover said in a report. "One look at this week's DOE report tells us that fundamentals in the world's largest oil-consuming market (U.S.) are not great."

Some analysts expect a growing global economy will help boost crude demand. Citigroup said it sees global gross domestic product expanding as much as 4 percent this year and next, led by developing countries.

"The ongoing global recovery with strong emerging market growth and a weak U.S. dollar are likely to continue supporting commodity prices over the medium and long term," said Citigroup, which expects oil to rise to $110 during the next six to 12 months.

The euro rose to $1.4155 on Thursday from $1.4083 late Wednesday while the dollar fell to 81.87 yen from 82.04 yen. A weaker U.S. currency makes dollar-based commodities such as oil cheaper for investors with other currencies.

In other Nymex trading in June contracts, heating oil rose 1 cent to $2.99 a gallon and gasoline added 2.3 cents to $3.04 a gallon. Natural gas futures gained 1 cent to $4.43 per 1,000 cubic feet.