BANGKOK (AP) -- The price of oil rose Monday after disappointing U.S. housing figures led to speculation that the U.S. Federal Reserve might take a very gradual approach toward winding down its economic stimulus.
Benchmark oil for October delivery was up 50 cents to $106.92 a barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange.
The contract gained $1.39, or 1.4 percent, to close at $106.42 on Friday. Oil rose after the U.S. government said that Americans cut back sharply in July on purchases of new homes, a sign that higher mortgage rates may weigh on the housing recovery.
Traders apparently saw the weak data as an indication that the Fed may need to wait before slowing down its bond-buying program. A slower phase-out of the Federal Reserve's monetary stimulus could also keep the dollar weaker, making commodities that are traded in dollars more appealing to investors with other currencies.
However, analysts at Mizuho Bank Ltd. in Singapore said in a commentary said that while the data on new home sales was worrisome, it was "not a game-changer in its own right" and that data on existing home sales and evidence of a trend would probably carry more weight.
Brent crude, which sets prices for imported oil used by many U.S. refineries, gained 21 cents to $111.25 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
- Heating oil added 0.8 cent to $3.107 per gallon.
- Natural gas added 4 cents to $3.525 per 1,000 cubic feet.
- Wholesale gasoline was steady at $2.871 per gallon.
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