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Oil steady above $41 as investors eye inventories

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[March 04, 2009]  SINGAPORE (AP) -- Oil prices rose above $43 a barrel Wednesday in Asia as regional stock markets rallied and investors looked to a U.S. crude inventory report later in the day for signs of demand amid the worst recession in decades.

Benchmark crude for April delivery rose $1.44 cents to $43.09 a barrel by late afternoon in Singapore on the New York Mercantile Exchange. Prices rose $1.50 to settle at $41.65 on Tuesday.

Asian stock markets rebounded Wednesday as hopes China would expand measures to revive its economy countered growing signs of economic decay in the U.S. and other major countries. European shares also gained.

The upward move followed heavy selling over the last two days and bucked a fifth-straight day of declines on Wall Street.

Traders also awaited Wednesday's release of crude inventory data by the U.S. Energy Department's Energy Information Administration, with analysts expecting oil stocks to rise by 2.2 million barrels for the week ended Feb. 27, and gasoline stocks to fall by 600,000 barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.


The EIA said last week that U.S. crude inventories rose by 700,000 barrels for the week ended Feb. 20. Analysts expected crude stocks would grow by 2.25 million barrels, and the smaller increase helped boost prices to over $45 a barrel before they fell on Monday.

The week before, the EIA said that inventories fell after rising more than 30 million barrels over the previous six weeks, suggesting crude demand, which had been dropping for months, may be stabilizing.

Oil prices rose Tuesday despite more dismal U.S. economic news. The National Association of Realtors said pending home sales sank 7.7 percent to a new low in January, well below economists' expectations.

Ford Motor Co. reported its U.S. sales fell 48 percent in February, a sign crude demand in the world's largest economy may continue to weaken.

The Dow Jones industrial average fell 0.6 percent to a 12-year low.

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Investors are also looking for signals that OPEC may announce another production cut at the group's next meeting on March 15. The Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global output, has announced 4.2 million barrels a day of production cuts since September in a bid to bolster prices.

An oil pipeline operated by a Royal Dutch Shell joint venture in Nigeria exploded, the company said Tuesday, without specifying what caused the explosion or whether it led to production cuts.

No known militant group has claimed responsibility for the attack. The region's main armed group, known by its acronym MEND, is largely responsible for three years of attacks on the oil industry, including many oil-pipeline bombings that have slashed output in Africa's largest producer.

In other Nymex trading, gasoline for April delivery fell 0.27 cent to $1.32 a gallon, while heating oil dropped 0.96 cent to $1.17 a gallon. Natural gas for April delivery was steady at $4.28 per 1,000 cubic feet.

Brent prices were up 76 cents at $44.45 on the ICE Futures exchange in London.

[Associated Press; By ALEX KENNEDY]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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