Oil prices waver on dour economic outlook

COLUMBUS, Ohio — Crude prices wavered Tuesday with more stark predictions of a long and painful downturn for the global economy.

COLUMBUS, Ohio — Crude prices wavered Tuesday with more stark predictions of a long and painful downturn for the global economy. Benchmark crude for August delivery rose 10 cents to $67.60 a barrel on the New York Mercantile Exchange. Futures for gasoline, natural gas and heating oil also fell. Oil prices have more than doubled in the past three months because of a weak dollar and some optimism about an economic rebound. Still, consumption remains at a 10-year low in the U.S. Economic news from outside the U.S. remains dour. Unemployment in 30 of the most developed market democracies will continue to rise and eventually reach 10 percent in 2010, according to the Paris-based Organization for Economic Cooperation and Development. Traders are awaiting word from the Federal Reserve about interest rates this week. The Fed is expected to maintain historically low rates, which have already knocked the dollar down against other major currencies, essentially making crude cheaper. Crude is priced in the U.S. currency, and a lot of money has flooded into the market with big investors using oil as a hedge against inflation. Many energy experts agree that that has resulted in artificially high prices for the past couple of months. Retail gas prices rose every day for nearly two months until Monday, though they remain well below the price last summer. Few expect that the Fed will raise rates right now, but everyone will be parsing the language of the Fed statement to determine if a rate hike is even possible in the near term. Oil trader and analyst Stephen Schork said if the Fed does not indicate that it will consider raising rates and oil continues to fall, that could be a sign that prices have peaked for now. Another sign of how much demand there is for crude and gasoline arrives Wednesday when the government releases its weekly supply report. Millions of barrels of unused gasoline are being pumped into storage houses, and the Energy Department is likely to report more of the same on Wednesday. Prices at the pump fell for a second straight day Tuesday after moving up 54 straight days. Prices slipped 0.7 cents to an average of $2.683 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Prices are 26.5 cents higher than a month ago but $1.389 below where they were a year ago. In other Nymex trading, gasoline for July delivery rose less than a penny to $1.8649 a gallon, as did heating oil to $1.7294. Natural gas for July delivery fell 7.3 cents to $4 per 1,000 cubic feet. In London, Brent prices rose 23 cents to $67.21 a barrel on the ICE Futures exchange. Associated Press writers Pablo Gorondi in Budapest and Alex Kennedy in Singapore contributed to this report. ______ Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, 

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