Oil on the rise again

Two weeks after the United States and other oil-importing nations took action that knocked down the price of oil to almost US$90 a barrel, it's back near US$100.

Oil is rising again as investors bet that the economies of many countries, including the US, will improve in the second half of the year, and global demand for petroleum will rise.

Benchmark oil for August delivery rose US$2.02, or 2.1 per cent, to settle at US$98.67 a barrel on the New York Mercantile Exchange.

Brent crude gained US$4.97, or 4.4 per cent, to settle at US$118.59 per barrel on the ICE Futures exchange.

The US and other nations in the International Energy Agency (IEA) have said they will release 60 million barrels of crude from emergency stocks to cover possible shortfalls caused by the shutdown of Libyan oil production because of ongoing unrest there.

Libya supplied about two per cent of the world's oil, much of it high-grade crude used for refined products like gasolene.

Benchmark oil fell as low as US$90.61 a barrel at the end of June following the IEA announcement.

It then began a steady climb, as investors shrugged off the IEA move and focused on the prospect of growing demand in the second half of the year, especially in the expanding economies of China, India and Brazil.

There are also more positive signs in the US economy that could point to more jobs and more energy consumption.

The US Labor Department said Thursday that the number of Americans who applied for unemployment benefits fell last week to the lowest level in seven weeks.

Payroll processor ADP said the private sector added 157,000 jobs last month, which was more than double what economists had forecast.

In addition, US factory orders rose 0.8 per cent in May to US$445.3 billion, which was almost 32 per cent higher than the low point during the recession, reached in March 2009.

In other Nymex trading for August contracts, heating oil rose 13.87 cents to settle at US$3.1020 per gallon and gasolene futures added 12.94 cents to settle at US$3.1270 per gallon.

Natural gas lost 8.4 cents to settle at US$4.138 per 1,000 cubic feet.

- AP