Oil at 7-week peak on Middle East tensions, strong gasoline

Wed Jul 18, 2012 5:33pm EDT
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By Robert Gibbons

NEW YORK (Reuters) - Oil prices rose on Wednesday, hitting a seven-week peak as violence in Syria and tensions with Iran reinforced geopolitical fears and U.S. Federal Reserve Chairman Ben Bernanke downplayed the risk of a double-dip recession.

Crude futures posted their sixth straight gain with lift from U.S. gasoline futures, which notched the biggest percentage gain in the oil futures complex. Gasoline moved above its 200-day moving average, boosted by the government's inventory report showing gasoline stocks fell last week, against expectations for a rise.

"Crude continues to show upside bias after the (second-quarter) sell-off, with the economy slowing seeming to be priced in and geopolitical worries and the gasoline draw down supportive," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

The Fed does not expect the U.S. economy to lurch back into recession, Bernanke told the House Financial Services Committee in a second day of congressional testimony that helped assuage worries about slowing demand for oil in a sluggish economy.

"At this point we don't see a double dip recession. We see continued moderate growth," Bernanke told the panel.

Brent September crude pushed up $1.16 to settle at $105.16 a barrel, reaching $105.46 in post-settlement trade, highest intraday price since May 30.

U.S. August crude rose 65 cents to settle at $89.87 a barrel, having reached $90.04, also the best intraday since May 30. The August contract expires on Friday.

Total crude trading volumes topped a half million lots for both Brent and U.S. crude, but turnover for both contracts lagged their 30-day averages.   Continued...

An employee holds a gas pump at a gas station of Hyundai Oilbank in Seoul June 15, 2012. REUTERS/Choi Dae-woong