Oil hovers above US$59 Tuesday on signs recession easing(update)

SINGAPORE: Oil hovered above $59 a barrel Tuesday in Asia after investors took heart from signs the U.S. recession is easing. Benchmark crude for June delivery was up 10 cents to $59.13 a barrel midday in Singapore in electronic trading on the New York Mercantile Exchange.

On Monday, the contract jumped $2.69 to settle at $59.03.

Investors on Monday cheered a better-than-expected profit report from home improvement chain Lowe's Cos., an uptick in homebuilder sentiment and positive comments from analysts about U.S. banks, all of which suggested the U.S. economy is gradually emerging from a severe recession.

The Dow Jones industrial average jumped 2.9 percent.

While most analysts expect oil prices to increase over the next year as global economic growth recovers, some suspect the recent surge from below $35 a barrel in March may have gone too far, too fast.

"The move from $40 to $60 has happened faster than we thought it would," said Bob Doll, vice chairman of BlackRock, which manages $1.3 trillion of assets.

"But a year from now oil prices should be modestly higher than where we are today."

The jump in prices for gasoline and other oil products shouldn't choke off a fledgling recovery in consumer demand since the fall from $147 a barrel in July helped free up extra spending cash, Doll said.

"We've got our eye on it, but we're not overly concerned," he said.

"Oil versus a year ago is still down a whole bunch."

In other Nymex trading, gasoline for June delivery was steady at $1.76 a gallon and heating oil was steady at $1.48 a gallon.

Natural gas for June delivery rose 1.1 cents to $4.15 per 1,000 cubic feet. In London, Brent prices fell 3 cents to $58.44 a barrel on the ICE Futures exchange. - AP

Earlier report

Oil prices bounce back

SIOUX FALLS, South Dakota: Energy prices resumed their climb into summer driving season Monday, a show of confidence that Americans will overlook dismal economic news as they head out on their Memorial Day weekend trips.

Benchmark crude for June delivery jumped $2.69 to settle at $59.03 a barrel on the New York Mercantile Exchange after dropping $2.28 Friday to $56.34.

With the June Nymex contract expiring Tuesday, the market was also keeping close tabs on the July contract, which rose $2.59 to settle at $59.59.

U.S. retail gasoline prices inched up again overnight to a new national average of $2.311 for a gallon (61 cents a liter) of regular unleaded, according to auto club AAA, Wright Express and Oil Price Information Service.

That's their highest level since early November, and about 71 cents per gallon above where retail gas ended 2008.

"The economic recovery may come down to miles per gallon as the market is trying to gauge where we are at in this economic recovery," Alaron Trading Corp. analyst Phil Flynn wrote.

A series of reports calling for even less global energy demand last week undercut optimism that a widespread economic recovery was imminent.

The International Energy Agency, the U.S. Energy Information Administration and the Organization of Petroleum Exporting Countries all slashed crude demand expectations.

The outlook for the U.S. economy also turned darker last week after dismal news on unemployment and housing.

Retail sales fell unexpectedly last month.

Issues that would have had consumer paying more for gas and other fuels last year do not pack the same punch this deep into a recession.

There was also an overnight explosion at a Delaware oil refinery, but it occurred at the refinery's ethylene complex.

Flynn said he doesn't think it will have a major effect on oil prices.

"It would be more of a concern if we didn't have so much spare capacity and excess oil out there," Flynn said.

In London, Brent prices rose $2.49 to settle at $57.47 a barrel on the ICE Futures exchange.

In other Nymex trading, gasoline for June delivery jumped 7.75 cents to settle at $1.7581 a gallon and heating oil gained 5.7 cents to settle at $1.4757 a gallon.

Natural gas for July delivery rose 4.8 cents to settle at $4.265 per 1,000 cubic feet. - AP

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