(Updates throughout, changes dateline from LONDON)
NEW YORK, June 2 (Reuters) - Oil rose on Monday, led by
gains in natural gas and refined products at the start of the
U.S. hurricane season.
U.S. crude <CLc1> settled up 41 cents at $127.76 a barrel,
off session lows of $125.22. London Brent <LCOc1> rose 24 cents
to $128.02.
"There's a big (crude) rally here, fueled by natgas, with
fund money coming in," said Tom Knight, trader at Truman Arnold
in Texarkana, Texas.
Oil gained along with natural gas prices, which rallied up
4 percent as the start of the U.S. hurricane season stirred
concerns that storms could cut oil and natural gas production
and shut refineries along the Gulf of Mexico.
Forecasters have called for an active storm season,
although Arthur, the Atlantic basin's first storm this year,
quickly dissipated after forming over the weekend.
Oil rallied back from early losses after an Iraqi official
said the country expected to boost oil exports this month to a
new post-war high of about 2.2 million barrels per day (bpd) --
about 130,000 barrels a day higher than in May.
[]
Pressure also came from early strength in the dollar against
the euro after a survey showed stronger-than-expected U.S.
manufacturing activity in May. []
Investors have flocked into oil and other commodities this
year as a hedge against the weaker dollar and rising inflation,
helping to push oil to record highs above $135 a barrel in May
and raising concerns that high prices could hurt consumer
nations' economies and clip demand.
The head of the U.S. Energy Information Administration, Guy
Caruso, told the Reuters Global Energy Summit that prices could
hold above $100 a barrel at least through 2009 and that U.S.
gasoline prices could hit new highs during the summer holiday
driving season. []
"If the crude oil prices stay around $120, $125, it looks
like (gasoline) might be somewhere in the $4.10 area," Caruso
said.
Caruso said faltering oil production growth from nations
outside of OPEC was keeping supply struggling to keep pace with
demand, adding he expected demand from No. 2 consumer China to
continue to boom even after the Olympics.
Oil prices have jumped six-fold since 2002 as supply gains
lag demand growth from emerging economies such as China,
sparking fuel protests across the globe.
Demand in consuming nations such as the United States and
Britain has already showed signs of slipping due to rising fuel
costs, and some analysts are concerned demand in some Asian
countries could be hit as governments cut subsidies.
A Reuters poll of analysts ahead of the weekly government
inventory data due out Wednesday forecast a 1.1 million barrel
gain in crude inventories, a 1.4 million barrel build in
distillates stocks and a 600,000 barrel build in gasoline.
[]
Speculators cut their net long positions in crude oil to
25,867 in the week to May 27, the lowest level since late
August and down from 50,060 in the previous week, data released
by the U.S. Commodity Futures Trading Commission (CFTC) showed
last week.
(Reporting by Matthew Robinson, Gene Ramos, and Robert Gibbons
in New York; Santosh Menon in London; Jonathan Leff and Maryelle
Demongeot in Singapore, editing by Matthew Lewis)
