Oil Rises After Report Shows U.S. Services Industries Expanded (Robert Tuttle)

May 5 (Bloomberg) -- Crude oil rose above $120 a barrel to a record in New York after a report showed that U.S. service industries expanded in April, signaling higher energy use.

 {xtypo_quote_left} ``Every time it appears they're going to calm down in Nigeria, they seem to get worse,'' Flynn said. {/xtypo_quote_left}

The Institute for Supply Management's index of non- manufacturing businesses, which make up almost 90 percent of the economy, grew for the first time since December, the Tempe, Arizona-based group said today. The report came after an oil pumping station was attacked in Nigeria.

The ISM report ``probably gave us a little bit of a bounce psychologically,'' said Phil Flynn, a commodities trader for Chicago-based Alaron Trading. ``Maybe the demand for oil is going to rebound.''

Crude oil for June delivery rose $3.86, or 3.3 percent, to $120.18 a barrel at 1:19 p.m. on the New York Mercantile Exchange. Oil surged to an intraday record of $120.36 today.

U.S. demand for petroleum products, such as gasoline and diesel, fell 2.7 percent in the past year, Energy Department data show, as slowing economic growth and higher-than-normal energy prices curtailed consumption. The decline has been countered by rising use in developing countries.

Demand in China, India, the Middle East and Russia ``can grow more than we are currently shrinking,'' said Roger Read, a Natixis Bleichroeder analyst in Houston. ``You keep thinking that there's got to be a point at which demand stops growing, but we haven't reached it yet, at least not in dollar terms.''

 

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