Oil prices start the new year at 26-month high

08:32, January 04, 2011      

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Oil prices rose past US$92 a barrel Monday, hitting a 26-month high, as the new year began with the prospect of skyrocketing crude prices as the US Federal Reserve is expected to maintain its "extremely easing" monetary policy.

Benchmark oil for February delivery rose as high as US$92.66 a barrel, $1.28 above last Friday's settlement price, in trading on the New York Mercantile Exchange.

The last time oil settled above US$92 a barrel was on October 3, 2008, when it reached US$93.88, according to The Associated Press.

At the pump in the United States, the world's largest oil consumer, the average charge for gasoline was US$3.07 a gallon Monday, according to the U.S. Energy Department.

Drivers in Los Angeles, Chicago and New York pay some of the highest prices in the country, ranging from $3.33 to $3.16 a gallon. The cheapest gas in major cities is found in Denver ($2.81), Houston ($2.88) and Boston ($3.01), The AP report said.

Oil has been gaining ground on speculation that the global economy will continue to grow in 2011, and the United States central bank is expected to keep its "quantitative easing" policy by buying more U.S. government debts with printed money. Many analysts expect the price for oil to reach at least US$100 a barrel this year.

Increasing prices at the pump will restrict consumers' spending on other shopping items at the stores including electronics, clothes and food, experts say, which will have a negative impact on economic growth.

The U.S. Institute of Supply Management said manufacturers produced more goods and booked more orders in December, leading to the fastest growth in factory activity since May. Automakers, computer and electronics companies and industrial machinery firms were especially strong.

In Europe, economics analysis firm Markit reported Monday its purchasing managers' index for manufacturers in countries that use the euro hit an eight-month high last month as stronger production growth and new orders lifted job creation, The AP report said.

On Wall Street, the Dow Jones Industrial Average closed about 93 points higher on the first trading day of 2011.

People's Daily Online / Agencies


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