Oil rises above $105 amid improving US economy

[March 08, 2012]  SINGAPORE (AP) -- Oil prices rose above $105 a barrel Wednesday in Asia amid expectations that an improving U.S. economy will eventually boost crude demand.

Benchmark oil for April delivery was up 45 cents to $105.15 at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $2.02 to settle at $104.70 per barrel in New York on Tuesday.

Brent crude was up 40 cents at $122.38 per barrel in London.

Crude has jumped from $75 in October as U.S. economic indicators including employment have slowly improved over the last few months. The government is scheduled to announce February jobs figures on Friday.

Some analysts are worried higher fuel costs will undermine consumer spending and economic growth while others say the economy is strong enough to absorb the higher prices.

"We are watching crude oil rise because this is what happens when economies grow," said Carl Larry of Oil Opinions and Outlooks. "$100 crude or $140 crude are not going to slow economic growth."

Crude rose above $110 last week but retreated from that level after Iran agreed Tuesday to let international nuclear inspectors into its facilities. Western powers have confronted Iran in recent months over its nuclear program and Iran has threatened to shut off a strategic waterway for oil tankers. The announcement eased concerns about a possible disruption to oil supplies around the globe.

The latest report on U.S. crude supply data suggests demand in the world's biggest economy is sluggish. The American Petroleum Institute said late Tuesday that crude inventories rose 4.6 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted an increase of 2 million barrels.

Inventories of gasoline fell 2.3 million barrels last week while distillates rose 924,000 barrels, the API said.

The Energy Department's Energy Information Administration reports its weekly supply data later Wednesday.

In other energy trading, heating oil rose 0.6 cent to $3.19 per gallon and gasoline futures added 2.4 cents at $3.25 per gallon. Natural gas fell 2.8 cents at $2.33 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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