Oil rises on U.S. retail sales increase

14/04/2008 - 16:51

By Ikuko Kao

LONDON (Reuters) - Oil prices jumped on Monday on an unexpected rise in U.S. gasoline sales in March, which pushed the country's overall retail sales higher for the month.

A brief U.S. pipeline shutdown and some production losses in Nigeria also helped bolster crude prices.

U.S. crude oil futures rose $1.21 to $111.35 a barrel by 11:40 a.m. EDT (1540 GMT). It hit a record high of $112.21 last week.

London Brent crude rose 80 cents to $109.55, closing in on its record high of $109.98 struck last week.

"The gain in March retail sales and a little bit about the Capline outage. That combination pushed crude up," said Phil Flynn, analyst at Alaron Trading.

U.S. retail sales unexpectedly rose 0.2 percent in March, pushed up by a jump in gasoline sales.

Sales at gasoline stations rose 1.1 percent even though pump prices hit a record in March, the Commerce Department said on Monday. Excluding gasoline sales, retail sales were flat last month.

The Capline crude oil pipeline, which brings crude from the Gulf of Mexico to the U.S. Midwest, restarted on Monday following a brief shutdown due to a leak and it will return to normal operation in a few days, operator Shell Oil Co. U.S. unit of Royal Dutch Shell said.

In Nigeria, Eni's Beniboye oil flow station has been losing 5,000 barrels of oil per day due to a fire that broke out during at the weekend after sabotage, the Italian energy firm said on Monday.

Nigeria produces about 2 million barrels of oil a day.

Some analysts said a fall in the dollar also helped oil prices to rise. The U.S. currency weakened on Monday, reversing its initial gains earlier in the day.

The recent weakness of the U.S. currency has prompted investors to shift money from dollar assets to commodities markets, partly contributing to oil's rally to new peaks.

During Asian and London trading, oil was mostly pressured down as weaker stock markets underlined economic gloom and the expectation of falling energy demand.

On Saturday, OPEC's head of petroleum market analysis told the International Monetary Fund's steering committee that global demand appeared to be softening, and that high oil prices in recent months were due more to financial market developments than fundamental growth in demand.

"Oil market fundamentals point to a market which is currently well supplied and the balance is expected to soften further due to lower seasonal demand in the coming months," Mohammad Alipour-Jeddi said in a statement.

His comments were set against growing signs of economic slowdown in the United States and after the International Energy Agency lowered its oil demand forecasts on Friday.

(Additional reporting by Jonathan Leff in Singapore and Gene Ramos in New York; editing by James Jukwey)

Contenido patrocinado

Otras noticias