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Oil prices extend gains

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(Globalpost/GlobalPost)

World oil prices rose further Friday on talk of a potential scaling back of US stimulus measures and despite a stronger dollar making crude more expensive for holders of rival currencies, analysts said.

Brent North Sea crude for delivery in July grew 69 cents to $104.47 a barrel in London midday deals.

New York's main contract, light sweet crude for June, climbed 48 cents to $95.64 a barrel.

"Crude oil prices extended gains on Friday... after Fed officials hinted at the possibility of reducing its $85 billion bond-buying programme," said Myrto Sokou, senior research analyst at Sucden brokers.

Speculation is increasing that the Federal Reserve is mulling an exit to its quantitative easing (QE) stimulus policy.

According to Dow Jones Newswires, Federal Reserve Bank of San Francisco President John Williams said he was open to scaling back the Fed's bond-buying programme in the coming months if the economy continued to improve.

Philadelphia Fed President Charles Plosser had already hinted at a potential tapering out of the US central bank's QE stimulus.

Such movement has given a lift to the dollar, at a time when US economic data has returned poor figures.

"The market has taken fright at those worse-than-expected numbers," David Lennox, resource analyst at Fat Prophets in Sydney, told AFP on Friday.

"Poor employment data (Thursday) from the US has sent ripples through the market, with dealers being concerned over its impact on oil demand."

New claims for US unemployment insurance benefits jumped sharply to 360,000 in the week ending May 11, after coming in unexpectedly low for several weeks, the US Labor Department said.

Initial jobless claims, a sign of the pace of layoffs, was up 32,000 from the previous week's revised figure.

Separate data showed that construction of new homes in the United States slowed sharply in April following a March surge.

On Wednesday, oil prices recovered from sharp early losses to finish higher on news that US stockpiles had eased from record levels.

US crude stocks fell by 600,000 barrels last week, suggesting a slightly tighter market.

Stocks nevertheless remained high at 394.9 million barrels, and worries of soft global demand amid rising supplies continued to cast a shadow over the markets.

The Organization of the Petroleum Exporting Countries last week boosted production to 30.21 million barrels a day in April from 29.93 million in March.

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http://www.globalpost.com/dispatch/news/afp/130517/oil-prices-extend-gains