Crude oil extends gains; rises on supply concerns, weak dollar

Crude oil prices extended gains, rising by 0.58 per cent on Tuesday at the domestic markets on supply concerns due to the escalating tensions in the Middle East. Reports that the U.S. will arm Syrian rebels due to allegations that government forces have used chemical weapons during the country's internal conflict sent oil prices gaining. At the MCX, crude oil futures for June 2013 contract were trading at Rs. 5,711 per barrel, up by 0.58 per cent, after opening at Rs. 5,695 against the previous closing price of Rs. 5,678. It touched the intra-day high of Rs. 5,720 till the trading. Sentiment improved further after manufacturing activity in the New York region rebounded to growth this month indicating a pickup in the world’s biggest economy which raised the demand outlook for the fuel. The Empire State Manufacturing index, the New York Fed’s general economic gauge, rose the most since March at 7.8 in June from -1.43 in the previous month, with a reading above 0 signaling expansion. Moreover, weaker greenback makes the crude oil cheaper for those holding other currencies, thus increasing demand. The U.S. dollar index, a measure of the value of the United States dollar relative to a basket of foreign currencies, was trading 0.11 per cent lower at 80.699 on the Inter-Continental Exchange (ICE)