OIL prices changed course yesterday as gloomy economic news raised hopes that global central banks will take more steps to stimulate growth.

Benchmark US crude added 47 cents to end the day at US$88.97 per barrel in New York. It fell below US$88 earlier when a report showed a significant increase in US oil supplies. Brent crude increased by 96 cents to finish at US$104.38 per barrel in London.

Phil Flynn, a commodity analyst at Price Futures Group, said investors are betting that the Federal Reserve and its counterparts around the globe will take action soon. Without more stimulus the global economy will be weighed down by recessionary conditions in many parts of Europe, a slowdown in Chinese manufacturing and sinking US consumer confidence.

Fed Chairman Ben Bernanke said earlier in July that the central bank is considering new measures to boost consumer spending and borrowing. But he didn't outline what steps the Fed would take.

"Who knows if it will happen," Flynn said of the Fed. "This could just be a lot of hype."

There wasn't any other reason for oil to rise. The US added to its ample supplies of oil last week. The Energy Information Administration reported that the nation's crude supply grew by 2.7 million barrels last week. Analysts were expecting supplies to fall by 250,000 barrels, according to a survey by Platts, the energy-information arm of McGraw Hill.

US crude supplies have grown this year to the highest levels since 1990.

Gasoline supplies rose more than expected. The EIA said that gasoline supplies increased by 4.1 million barrels last week. Analysts were expecting supplies to grow by only 750,000 barrels.

In other futures trading, heating oil added 1.96 cents to end at US$2.844 per gallon while gasoline lost 3.19 cents to finish at US$2.7929 per gallon. Natural gas fell by 11.7 cents to end at US$3.07 per 1,000 cubic feet.

Source:shanghaidaily.com