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Oil prices rise above US$133 a barrel
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Oil rose above US$133 a barrel Monday on persistent worries about global petroleum supplies and the outlook for the US dollar.

Reports of an attack by militants on an oil pipeline in Nigeria, one of Africa's largest oil exporters, also helped boost prices.

Light, sweet crude for July delivery was up 98 cents at US$133.17 a barrel in electronic trade on the New York Mercantile Exchange by the afternoon in Europe. The contract rose US$1.38 to settle at US$132.19 a barrel on Friday.

Nymex floor trading will be closed Monday for Memorial Day and it also was a holiday in Britain, resulting in lower trading volume than usual.

In London, July Brent crude futures rose US$1.13 to US$132.70 a barrel on the ICE Futures exchange.

The dollar has weakened over the last week after a modest recovery, and investors will be watching economic data out of the United States to be released over the next few days for further clues about the health of the world's biggest economy.

"The dollar's been swinging down again," said Mark Pervan, senior commodity strategist at Australia & New Zealand Bank in Melbourne, and that's "going to sway sentiment."

Oil and other hard commodities are seen as hedges against a weakening greenback and inflation. Also, a weak dollar, the currency of international oil trade, makes petroleum products less expensive to Asian and European buyers.

This week, investors will be watching for what implications US consumer confidence, new home sales, gross domestic product and other economic data might have for the dollar and oil prices, he said.

"It's a pretty price sensitive week for economic data," Pervan said. "The data we're seeing out of the US at the moment looks pretty weak. You'd expect that trend to continue, pushing further down on the dollar."

The dollar, one of the factors that has fed oil's rally from about US$65 a year ago, was slightly lower against the yen, but up a bit against the euro in currency trading during the afternoon in Europe after losing ground last Friday in New York.

The euro was worth US$1.5764 compared with US$1.5775 on Friday, while the dollar stood at 103.41 Japanese yen from 104.17 yen Friday.

Prices also were supported when militants in Nigeria, a major supplier to the US market, claimed they destroyed an oil pipeline and killed 11 soldiers in a gunbattle.

The Movement for the Emancipation of the Niger Delta says it attacked the pipeline operated by a Royal Dutch Shell PLC joint venture early Monday. Shell officials were not immediately available for comment, and a military spokesman had no immediate confirmation of any overnight incidents.

Last week, a series of supply warnings shook markets, and Thursday, a report that the International Energy Agency - the energy watchdog for the most industrialized nations - is in the process of lowering its forecast for long-term global oil supply, sent crude futures rocketing to an all-time high of US$135.09 a barrel.

The US driving season officially kicked-off with the long Memorial Day weekend there, and even if demand for gasoline and diesel is lower than it was a year ago, it will still be stronger than it was in the preceding months, he said.

In other Nymex trading, heating oil futures rose 7.89 cents to US$3.9445 a gallon (3.8 liters) while gasoline prices rose 2.95 cents to US$3.4255 a gallon. Natural gas futures rose 18.2 cents to US$12.039 per 1,000 cubic feet.

(China Daily via Agencies May 27, 2008)

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