Monday, March 23, 2009

HOUSTON (AP) - Oil prices jumped above $53 a barrel Monday, getting a boost from optimism at stock markets at home and abroad as Treasury Secretary Timothy Geithner unveiled a plan to resolve the nation’s worst banking crisis in 70 years.

Benchmark crude for May delivery rose $1.45 to $53.52 a barrel in trading on the New York Mercantile Exchange, continuing its upward momentum. On Friday, oil ended the week above $50 a barrel for the first time this year, helped by a weaker dollar.

In London, Brent prices rose 4 percent, or $2.06, to $53.28 a barrel on the ICE Futures exchange.

“I think what we’re seeing is a little bullish overflow from today’s financial news,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.

The Obama administration’s latest initiative to spur economic growth, introduced Monday by Geithner, seeks to parlay government and private resources to purchase an initial half-trillion dollars of bad assets off the balance sheets of banks. Eventually, the plan could grow to $1 trillion.

Also Monday, the National Association of Realtors said sales of existing homes rose from January to February. But the median sales price plunged to $165,400, down 15.5 percent from $195,800 a year earlier. That was the second-largest drop on record.

Wall Street seemed generally enthused, as the Dow Jones industrial average rose 259.73, or 3.6 percent, to 7,538.11 in late-morning trading.

Stock market indexes closed mostly stronger in Asia, with Hong Kong’s Hang Seng gaining 4.8 percent and the Nikkei 225 in Tokyo advancing 3.4 percent, while in Europe the FTSE 100 in London rose 1 percent and Germany’s DAX up 1.5 percent.

The U.S. Federal Reserve said last week that it will pump $1.2 trillion into the economy to lower interest rates on mortgages, which could by extension prop up oil prices, analysts say. Such an influx weakens the dollar against the euro and the British pound and increases the allure of commodities like oil and gold.

“The dollar may be key for the trend change in energy,” Phil Flynn, an analyst at Alaron Trading Corp., said in a report Monday. “The energy complex turnaround has not been triggered by demand but by the central bank action.”

Some, however, cautioned that the advance may not be sustainable as global oil demand remains weak.

“Oil pricing is driven by the financial rally. It’s questionable whether $50 is the new floor because the fundamental picture for oil has not changed. Demand remains weak in the near term and oil pricing may be vulnerable,” said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.

Algeria’s Energy Minister Chakib Khelil predicted Sunday that crude oil prices could hit $60 per barrel by the end of the year.

Bank of America Securities-Merrill Lynch has also raised its forecast for crude prices to $52 a barrel this year, from $50 a barrel, on the back of a tighter-than-expected oil market balance.

U.S. prices at the pump rose overnight to a new national average of $1.956 for a gallon of regular unleaded, up three-tenths of a cent from Sunday, according to auto club AAA, Wright Express and Oil Price Information Service. Gasoline is 3.1 cents a gallon higher than a month ago and $1.308 a gallon cheaper than it was last year this time.

In other Nymex trading, gasoline for April delivery rose 5 cents to $1.50 a gallon, while heating oil added 7.1 cents to $1.4551 a gallon. Natural gas for April delivery rose 9 cents to $4.318 per 1,000 cubic feet.


Associated Press writers Pablo Gorondi in Budapest, Hungary, and Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.

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