Oil prices trade above $77 on improving global economic report




Oil prices rose yesterday (Tuesday) as the global economic recovery got a boost on two fronts after weeks of mixed news.Benchmark crude rose about three per cent in midday trading, a day after the quarterly company earnings season got off to a better-than-expected start. In addition, a new global forecast called for a slight improvement in oil demand next year.


Benchmark crude for August delivery gained $2.16 at $77.13 on the New York Mercantile Exchange.At the gas pump, many drivers are still seeing lower prices. The national average for a gallon of unleaded regular was $2.713 yesterday, according to AAA, Wright Express and Oil Price Information Service. That’s 1.1 cents less than a week ago and 18.4 cents higher than a year ago.


The prospect of an improving economy with stronger demand for oil and gas offset concerns about above-average supplies, which have kept crude prices bouncing between $70 and $80 a barrel since the end of May.Alcoa Inc., the Pittsburgh aluminum manufacturing giant, and railroad operator CSX Corp. issued upbeat forecasts on Monday with their second-quarter earnings results. Alcoa said that global consumption of aluminum will grow this year by more than it forecast just three months ago.


Alcoa’s varied customer base, from aerospace to beverage can manufacturers, can provide insight into economic trends while CSX ships a wide range of business and consumer products.“After all the bad economic news over the last six weeks or so, good earnings reports suggest companies have money and they can spend some of that, and that makes people feel a little more ebullient about the market,” said Michael Lynch, president of Strategic Energy & Economic Research.


The news boosted stock prices. The Dow Jones Industrial Average rose more than 160 points in midday trading. The NASDAQ and the S&P 500 were higher as well. Earnings are expected to dictate trading over the next few weeks as hundreds of companies release results.The International Energy Agency predicted 2011 global oil demand would increase by 1.3 million barrels a day, or 1.6 per cent, to 87.8 million barrels a day, largely due to economic growth in emerging countries.


Demand in richer, more developed countries is expected to fall by 0.5 per cent from this year, in part because of fuel-efficiency measures that will reduce the need for oil, IEA said.The forecast was the first detailed look at 2011 from the Paris-based agency, the energy arm of the Organization for Economic Cooperation and Development.Its 2010 outlook was little changed at 86.5 million barrels a day, a 2.1 per cent increase from 2009.


In other Nymex trading in August contracts, heating oil gained 6.13 cents at $2.0526 a gallon, gasoline rose 5.41 cents to $2.0821 a gallon and natural gas added 0.9 cent at $4.397 per 1,000 cubic feet.In London, Brent crude rose $2.39 to $76.76 a barrel on the ICE Futures exchange.





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