Crude oil rose for a second day on expectations that a rebound in the economy may lead to higher demand for gasoline, diesel and jet fuel.
The US unemployment rate fell to 5.6 percent in January, the first decline since May, a sign the recession may be close to an end. Reduced fuel use caused demand last year to fall for the first time in decade, according to government estimates. Weaker demand prompted OPEC and other countries to cut crude oil output last month to shore up prices.
"The economy's getting a little better," said Michael Fitzpatrick, an oil broker at Fimat USA Inc in New York, a unit of French bank Societe Generale SA. Supplies may tighten as "the production cuts start to bite."
Crude oil for March delivery rose US$0.90, or 4.6 percent, to US$20.38 a barrel on the New York Mercantile Exchange. Prices were up 2 percent this week and down 32 percent from a year ago.
The rally accelerated after crude-oil prices rose above US$20, triggering pre-arranged buy orders from large speculators, mostly hedge funds, Fitzpatrick said.
Petroleum products also rose. Gasoline for March delivery rose US$0.0292, or 5.1 percent, to US$0.6034 a gallon. It was the biggest gain since Jan. 2. Heating oil for March delivery rose US$0.0215, or 4 percent, to US$0.5531 a gallon.
The climb in prices came as officials of Royal Dutch/Shell Group and a refinery workers union said they had reached agreement in labor talks that had threatened to lead to a strike.
The agreement between Shell and the Paper, Allied-Industrial, Chemical and Energy Workers will be used to draft contracts with other oil companies, including ChevronTexaco Corp, Exxon Mobil Corp, BP Plc and Phillips Petroleum Co, union spokeswoman Lynn Baker said. The talks covered 30,000 workers at 153 oil and gas facilities, including refineries and terminals.
Prices rose in London early today on concern that an explosion at an oil-processing center in Kuwait would disrupt supplies from the country, OPEC's sixth-largest producer.
Firefighters were expected to extinguish the blaze at the plant, which handles 15 percent of the country's crude-oil supplies, by this afternoon, the official Kuwait News Agency reported. Oil exports will be unaffected, the agency said.
In London, Brent crude oil ended the day up US$0.80, or 4.2 percent, at US$19.98 a barrel on the International Petroleum Exchange. Brent prices were up 3.1 percent this week.
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