Oil at $101 amid weak dollar, mixed demand signs

[May 26, 2011]  SINGAPORE (AP) -- Oil prices hovered above $101 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 14 cents to $101.46 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 down 17 cents at $114.74 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 $1.4168 on Thursday from $1.4083 late Wednesday while the dollar fell to 81.93 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 1.2 cents to $2.99 a gallon and gasoline added 2.2 cents to $3.04 a gallon. Natural gas futures gained 2 cents to $4.44 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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