Oil prices rise as U.S. economic outlook brightens

PanARMENIAN.Net - The price of oil rose Friday, June 28 as the U.S. economic outlook brightened and concerns eased about a credit crunch in China, The Associated Press reports.

Benchmark oil for August delivery was up 20 cents to $97.23 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract rose $1.55 to finish at $97.05 on Thursday after the U.S. government released data showing an increase in in consumer spending and home sales while jobless claims fell.

"The truth to these markets is that they are lacking any good reason to go down," said Carl Larry of Oil Outlooks and Opinions. "We're starting to settle into a fair value and it's hard to argue lower."

The number of Americans seeking unemployment benefits fell by 9,000 to a seasonally adjusted 346,000 last week, evidence that the job market is still improving modestly. Steady job gains could help the economy expand later this year and thus increase energy consumption.

The U.S. Commerce Department said consumers spent more in May as their income rose, although spending was weaker in April, February and January than previously estimated. The number of pending home sales jumped in May to the highest level in more than six years, the National Association of Realtors said.

Fears of a cash crunch in China, which could cripple small- and medium-sized businesses, were eased after the country's central bank indicated it would not allow an all-out crisis to unfold.

Analysts at Bank of America Merrill Lynch said in a commentary that "it is time for markets to calm down now and that the worst is probably behind us" and that a hard economic landing would be avoided, since no Chinese policymaker would want to shoulder the blame for that.

Brent crude, which is used to set prices for oil used by many U.S. refineries to make gasoline, rose 18 cents to $103 a barrel.