Oil prices rally in late trade

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Oil prices rallied late Wednesday as the dollar weakened and traders looked past unexpected rises in US energy inventories.

Brent North Sea crude for delivery in July jumped $1.74 to $114.27 a barrel, after falling slightly in early deals.

New York's main contract, light sweet crude for July, climbed $1.10 to $100.69.

In late London trade, the euro firmed against the dollar. A weaker US currency makes dollar-denominated commodities such as oil cheaper for holders of other units, fuelling demand.

US crude oil stockpiles surprisingly rose by 600,000 barrels in the week to May 20, confounding analyst expectations of a fall.

Last week also saw gasoline (petrol) inventories jump by a huge 3.8 million barrels in contrast to predictions of a drop.

Gasoline figures are being closely watched ahead of the peak-demand driving season in the United States starting next week, when many Americans begin hitting the road for their summer holidays.

As oil prices shot higher on Wednesday, analysts were predicting further gains over the coming months, partly owing to political turmoil in the crude-producing Middle East and North Africa region.

US investment banking giant Goldman Sachs estimated this week that Brent oil would hit $130 a barrel over the next 12 months.

Rival Morgan Stanley also raised its 2012 forecast to $130 a barrel, from $105, as supplies tighten on a loss of production in Libya, where NATO air strikes are helping rebels try to oust strongman Moamer Kadhafi.

© 2011 AFP

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