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Oil rises as market weighs supply report, Bernanke
Aggregated Source: Shanghai Daily: Business

THE price of oil rose yesterday as US crude supplies fell for a third week and the chairman of the Federal Reserve signaled no impending change in the central bank's stimulus program.

US benchmark crude for August delivery gained 48 cents to close at US$106.48 per barrel on the New York Mercantile Exchange. Oil is up nearly US$10 a barrel in July.

The price of oil drew support from another sizable decline in oil supplies. The US's inventory of crude fell by 6.9 million barrels last week, bringing the three-week decline to 27.1 million barrels, the Energy Department said.

That was somewhat offset by a sharp decline in gasoline demand compared with last week. Gasoline consumption fell by 570,000 barrels from a week ago, when demand was boosted by drivers hitting the road for the July Fourth holiday. Gasoline supplies rose by 3.1 million barrels.

Analysts expected a decline of 2.5 million barrels in crude oil supplies and no change in gasoline supplies, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

The markets also weighed comments to Congress from Federal Reserve Chairman Ben Bernanke. He said the central bank had no firm timetable for cutting back on the bond purchases that have helped depress long-term interest rates.

The withdrawal of Fed bond purchases could push the dollar higher as US interest rates would tend to rise. That would make oil a less attractive investment for investors with foreign currencies that have to be converted to dollars.

In London, Brent crude gained 47 cents to finish at US$108.61 a barrel on the ICE Futures exchange.

In other energy futures trading on Nymex:

- Wholesale gasoline fell 2 cents to end at US$3.11 per gallon.

- Heating oil rose 2 cents to finish at US$3.07 a gallon.

- Natural gas dropped 5 cents to end at US$3.63 per 1,000 cubic feet.

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Copyright Shanghai Daily: Business