London: Crude oil rose on speculation that economic growth in the US, the world's biggest energy consumer, will sustain a global recovery in fuel demand.
Oil climbed above $74 (Dh271) a barrel in New York after Federal Reserve Bank of Chicago President Charles Evans said the US economic recovery will continue amid uncertainties prompted by Europe's debt crisis. About 28 million people had been expected to be on road trips in the US during the three-day Memorial Day weekend that ended yesterday, a jump of 5.8 per cent from a year earlier and the first increase since 2005, according to AAA, the country's biggest motoring organisation.
"Gasoline consumption has been on the rise recently, and Memorial Day in the US officially marks the beginning of the driving season, which normally leads to higher demand," said Eugen Weinberg, head of commodity research with Commerzbank AG in Frankfurt. "Also the continuing struggle with the oil spill in the Gulf of Mexico is supporting the prices."
Crude oil for July delivery gained as much as 71 cents, or 1 per cent, to $74.68 a barrel in electronic trading on the New York Mercantile Exchange. It was at $74.48 at 12.40pm London time. Oil futures are down 14 per cent in May, the biggest monthly drop since December 2008. Floor trading was closed yesterday for the Memorial Day holiday in the US. Electronic trades were to be booked to today for settlement purposes.
Brent crude for July settlement rose as much as 70 cents, or 1 per cent, to $74.72 a barrel on the ICE Futures Europe exchange in London and was at $74.63 a barrel at 12.40pm local time.
Summer holidays
US gasoline demand usually peaks June through August as motorists take to the roads for summer holidays. Gasoline stockpiles fell for a third week last week to 221.6 million barrels, 5.8 per cent above the five-year average level, the Energy Department said last week.
Crude oil inventories climbed for the 16th time in 17 weeks to reach 365.1 million barrels. Refiners cut processing rates even as imports increased.
