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Oil above $104 after US GDP, supply reports

The Associated Press

7/31/2013

NEW YORK — The price of oil rose above $104 a barrel Wednesday, a day after hitting a four-week low. But traders say further gains are unlikely.

U.S. benchmark oil was up $1.25 to $104.33 per barrel at midday on the New York Mercantile Exchange. Oil fell $1.47 Tuesday to finish at $103.08 per barrel, the lowest closing price since July 3.

Traders had plenty of data to assess Wednesday. The government said the U.S. economy grew at a better-than-expected annual rate of 1.7 percent in the second quarter. And a survey by payroll company ADP showed businesses created a healthy 200,000 jobs this month.

The Energy Department said oil supplies rose by 400,000 barrels last week — the first increase in five weeks — although supplies at the crucial Cushing, Oklahoma, hub for benchmark West Texas Intermediate crude were down by 1.9 million barrels.

The price of benchmark WTI was up 7 percent this month as of Tuesday. Analysts say any further gains in oil prices should be limited because of abundant supplies.

The government said gasoline supplies rose as well last week, up 800,000 barrels. Demand for gasoline increased by 3.2 percent in the four weeks ended July 26 compared with a year earlier.

Bank of America Merrill Lynch issued a report Wednesday that said rising production in the U.S. and slowing growth in emerging markets should constrain oil prices. The research firm said that "unless a deteriorating geopolitical outlook in the Middle East results in further crude oil supply disruptions, the rally in WTI prices is unlikely to persist."

Later Wednesday the Federal Reserve will give an updated assessment of the U.S. economy when it wraps up a two-day meeting in Washington.

On Friday the release of employment data for July will be examined for hints about future energy demand in the world's No. 1 economy.

Brent crude, traded on the ICE Futures exchange in London, rose 13 cents to $107.04 per barrel.

In other energy futures trading on Nymex:

— Wholesale gasoline was flat at $2.97 a gallon.

— Heating oil rose 3 cents to $3.04 a gallon.

— Natural gas rose 1 cent to $3.44 per 1,000 cubic feet.

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