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Bloomberg: Oil Trades Little Changed After Rising on U.S. Cash Injection

EXTRACT: Gasoline for September delivery was at $1.9250 a gallon. It gained 1.8 percent $1.9232 yesterday as Royal Dutch Shell Plc cut production at its Deer Park refinery, anticipating delayed crude deliveries after Hurricane Dean close Mexican oil fields. The plant, which can process about 340,000 barrels a day, should return to normal operating rates this weekend, the company said late yesterday.

THE ARTICLE 

By Christian Schmollinger and Gavin Evans

Aug. 24 (Bloomberg) — Crude oil was little changed in New York after rising yesterday on speculation cash injections into the U.S. economy may contain losses on bad home loans and help maintain growth in the world’s largest oil user.

U.S. banks borrowed an average $1.2 billion a day the past week to supply credit to clients, the Federal Reserve said yesterday. Credit costs worldwide jumped the past two weeks as defaults on subprime loans in the U.S. reached a 10-year high. Gasoline rose for second day yesterday on a report showing a jump in late-summer U.S. fuel demand.

“The risk from the economic situation is getting smaller than before, so demand should stay strong,” said Tetsu Emori, chief commodities strategist at Astmax Futures Ltd. in Tokyo. “The price is being pushed by the speculative money such as the hedge funds.”

Crude oil for October delivery was at $69.90 a barrel, up 7 cents, in after-hours electronic trading on the New York Mercantile Exchange at 1:46 p.m. in Singapore.

The contract rose 57 cents, or 0.8 percent, to $69.83 yesterday, its first gain in four days.

U.S. shares fell for the first day in six yesterday after Countrywide Financial Corp., the nation’s largest mortgage lender, said the housing slump may lead to a recession. Bank of America Corp. bought $2 billion of Countrywide’s preferred stock to help it through a lending drought that has shut many smaller lenders.

“It’s a little bit of a relief rally,” said Mark Waggoner, president of Excel Futures Inc. in Huntington Beach, California. “People know that this is pretty much the last hurrah for summer, and that after this the economy is going to slow down.”

Financial Markets

The Standard & Poor’s 500 Index declined 0.1 percent to 1,462.50 yesterday. It plunged to a five-month low of 1370.60 on Aug. 16.

Brent crude oil for October settlement was at $69.90 a barrel, up 4 cents, on the London-based ICE Futures exchange at 1:46 p.m. Singapore time. The smaller gain by the Nymex contract yesterday left it at a discount to Brent futures for the first time in a month.

New York oil prices have dropped 11 percent from the record $78.77 a barrel on Aug. 1 as U.S. gasoline demand waned and on speculation tightening credit would slow economic growth. Oil closed below $70 for the first time in seven weeks on Aug. 21.

Gasoline

Gasoline for September delivery was at $1.9250 a gallon. It gained 1.8 percent $1.9232 yesterday as Royal Dutch Shell Plc cut production at its Deer Park refinery, anticipating delayed crude deliveries after Hurricane Dean close Mexican oil fields.

The plant, which can process about 340,000 barrels a day, should return to normal operating rates this weekend, the company said late yesterday.

Petroleos Mexicanos, the state-owned oil monopoly, plans to restart production from its fields on Aug. 24 if Hurricane Dean left no damage.

Pemex, as the Mexico City-based company is known, said Aug. 22 that it expects to reach 80 percent of its normal production level early next week and 100 percent later that same week.

Gasoline rose from a five-month low on Aug. 22 when a U.S. Energy Department report showed deliveries from refineries and terminals jumped to a record last week as retailers filled tanks before the Sept. 3 Labor Day holiday weekend.

“Summer is over,” Excel’s Waggoner said. “Most of the gasoline they are going to be using over the weekend has already been delivered.”

The September gasoline contract expires Aug. 31. The more widely held October contract was at $1.8580 a gallon, after rising 1.7 percent to $1.8573 yesterday.

To contact the reporters on this story: Christian Schmollinger in Singapore at [email protected] ; Gavin Evans in Wellington at [email protected]

Last Updated: August 24, 2007 01:50 EDT 

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