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Crude oil hits over $75 a barrel

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Crude oil rose above $75 a barrel in New York, the highest in a year, on optimism the global economic recovery will boost energy demand.

Oil climbed for a fifth day as the dollar declined and Asian shares advanced. Prices rose yesterday after the Organization of Petroleum Exporting Countries upgraded its 2010 global demand forecast on expansion in emerging economies.

“This rally today really was prompted by two things: one, the revised demand forecast from OPEC and the other, the continued weakening of the U.S. dollar,” said Victor Shum, a senior principal at energy consultants Purvin & Gertz Inc. in Singapore. “The world is simply getting less negative in terms of demand growth.”

Crude oil for November delivery gained as much as 98 cents, or 1.3 percent, to $75.13 a barrel in electronic trading on the New York Mercantile Exchange. That’s the highest since Oct. 21, 2008. The contract traded at $74.89 at 1 p.m. Singapore time.

Futures have gained 68 percent this year on speculation demand will bounce back as economies emerge from recession. The dollar’s decline has also bolstered the investment appeal of commodities including gold, which hit a record high for a second day. The U.S. currency touched $1.4889 per euro, the weakest level since August 2008. Gold for immediate delivery gained as much as 0.5 percent to $1,069.80 an ounce.

“The dollar reached a 14-month low yesterday and today has continued to weaken against the euro and Japanese yen,” Shum said. “That has fueled momentum to break through the $75 level.”

U.S. Stockpiles

The MSCI Asia Pacific Index climbed to a 13-month high, adding 0.7 percent to 119.86 at 1:44 p.m. in Tokyo.

“Oil is showing the impact from the financial markets — gold and stock markets,” said Ken Hasegawa, a commodity derivatives sales manager at brokers Newedge in Tokyo.

Oil rallied even as stockpiles in the U.S., the world’s largest energy consumer, are expected to have increased. Commercially held crude oil inventories rose 1.15 million barrels in the week to Oct. 2, according to the median of estimates from 12 analysts polled by Bloomberg News. Gasoline stockpiles probably climbed 1 million barrels, the survey showed.

The Energy Department will release its weekly report tomorrow at 11 a.m. in Washington, a day later than usual because of the Columbus Day holiday Oct. 12. The industry-funded American Petroleum Institute will put out its data today.

Demand Upgrades

OPEC, which pumps 40 percent of the world’s oil, yesterday raised its forecast for global demand for a second month. The 12-member group predicted consumption next year will rise 0.8 percent to 84.93 million barrels a day, led by emerging markets. The International Energy Agency on Oct. 9 raised its demand projection for a third month.

“It is further fueling the sentiment that the demand outlook is better than what a lot of people are expecting,” said Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. in Melbourne.

Brent crude oil for November settlement rose as much as 88 cents, or 1.2 percent, to $73.28 a barrel on the London-based ICE Futures Europe exchange. The contract was at $73.14 a barrel at 1 p.m. in Singapore. Yesterday, it gained 1.5 percent to $72.40 a barrel, the highest settlement since Aug. 28.

Source: Bloomberg

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