BUSINESS

Oil rises for 3rd day as investors eye commodities; natural gas plummets

04/22/2013 04:14 EDT | Updated 06/22/2013 05:12 EDT
NEW YORK, N.Y. - Oil rose for a third straight day Monday as relatively low oil prices rekindled interest among buyers.

Benchmark oil for May gained 75 cents to finish at US$88.76 a barrel on the New York Mercantile Exchange.

Traders have cautiously returned to buying certain key commodities, including gold and oil, after a big sell-off early last week. Gold rose nearly $26 an ounce Monday.

Brent crude, which is used to price oil used by many U.S. refiners, rose 74 cents to $100.39 on the ICE Futures exchange in London.

Over the past three weeks, the price of oil has fallen by 9 per cent to $88 a barrel, being driven lower by rising global supplies and lower-than-expected demand in the world's two largest economies, the United States and China.

Also, oil production is growing quickly in the U.S. and Canada, helping boost global supplies. And some of the factors that pushed prices higher the two previous years — political turmoil in North Africa and the Middle East and refinery disruptions in the U.S. — haven't materialized this spring.

At the same time, demand for fuels is growing slower than expected. China, the world's biggest oil importer, is experiencing slower-than-expected economic growth. And much of Europe is in recession.

However, political turmoil or refinery problems could crop up at any time. Analysts are particularly worried about the transition of power in Venezuela, a major oil exporter, after the death of President Hugo Chavez. Violence has erupted in the wake of a closely contested election, and the financial situation of the country is precarious. Analysts worry that the country's oil production could slip.

Natural gas fell 14 cents to $4.27 per 1,000 cubic feet. Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said the drop was caused by forecasts for above normal temperatures starting by the end of this week.

In other energy futures trading on the Nymex:

— Gasoline was flat at $2.77 per gallon.

— Heating oil added two cents to $2.81 a gallon.

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AP Energy Writer Jonathan Fahey in New York contributed to this report.

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