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Oil above $103 after 37 percent rally in 6 weeks

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[November 17, 2011]  SINGAPORE (AP) -- Oil prices rose above $103 a barrel Thursday in Asia, extending a 37 percent rally during the last six weeks.

HardwareBenchmark crude for December delivery was up 67 cents at $103.26 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $3.22 to settle at $102.59 in New York on Wednesday.

Brent crude for January delivery slumped 28 cents to $111.60 a barrel on the ICE Futures Exchange in London.

Oil has soared from $75 on Oct. 4 amid signs the U.S. economy is growing slowly -- rather than slipping into a recession as some analysts feared during the summer.

Oil prices jumped Wednesday after Canadian pipeline company Enbridge announced it would ship crude away from a key delivery point in Cushing, Oklahoma. The company bought a 50 percent stake in the Seaway pipeline from ConocoPhillips and plans to use it to transport oil from Cushing to refineries along the Gulf Coast, where much of it will be shipped overseas because of rising demand from Latin America.

The benchmark U.S. crude is West Texas Intermediate, or WTI.

"The belief that rising domestic production is flooding Cushing dictated the fate of WTI for most of the year," Barclays Capital said in a report. "This is where the reversal of Seaway has a huge totemic significance, in its ability to debottleneck Cushing."

J.P. Morgan raised its 2012 forecast for the average price of crude to $110 from $97.50.

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Some analysts expect Europe's debt crisis and weak economic growth will undermine crude demand and eventually send prices lower.

"The euro-zone crisis is already undermining global business confidence, reducing risk appetite in financial markets and strengthening the U.S. dollar, all important negatives for commodity prices," Capital Economics said in a report. "Even if the crisis can be contained to the region, recession in Europe would still have a significant impact on commodity demand."

In other Nymex trading, heating oil added 1.2 cents to $3.15 per gallon and gasoline futures slid 0.9 cents to $2.62 per gallon. Natural gas gained 1.0 cent at $3.35 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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