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Crude Oil Ends Higher As Eurozone Concerns Ease

U.S. crude oil futures closed higher Tuesday on global cues, with some encouraging economic data that showed economic sentiment in Germany improved for the fifth straight month, while Spain's treasury bill auction saw strong demand although at a higher cost. An improving U.S. equity market also nudged oil prices.

There were some positive signs from the Spanish bond auction with strong demand for its treasury bills Tuesday, although borrowing costs continued to be high. Nevertheless, the mixed reaction to the auction was perceived positively by global markets.

Light Sweet Crude Oil futures for May delivery, gained $1.27 or 1.2 percent to close at $104.20 a barrel on the New York Mercantile Exchange Tuesday.

Crude prices scaled a high of $105.07 a barrel intraday and a low of $102.66.

Investors also reacted positively to the International Monetary Fund move to lift its global economic growth outlook for 2012 and 2013, citing improved financial conditions and easing in the financial crisis. However, the lender cautioned that the recovery was not complete and another acute crisis in Europe could pose a threat to the global economy.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.524 on Tuesday, down slightly from 79.530 in North American trade late Monday. The dollar scaled a high of 79.76 intraday, with a low of 79.39.

The euro was trading slightly lower against the dollar at $$1.3125 on Tuesday, as compared to $1.3141 late Monday. The euro had scaled a high of $1.3171 intraday with a low of $1.3092.

In economic news, the Mannheim-based Centre for European Economic Research (ZEW) said Germany's economic sentiment improved for the fifth straight month in April The indicator of economic sentiment rose to 23.4 in April from 22.3 in March. Economists had expected the index to fall to 19.

The eurozone annual inflation for March was revised up to 2.7 percent from 2.6 percent, final data from Eurostat showed. The rate was 2.7 percent in February. Inflation continues to stay above the European Central Bank's 'below, but close to 2 percent' target.

Meanwhile, U.K. inflation increased for the first time in six months in March driven by higher food and clothing prices, denting hopes of another round of quantitative easing. Annual inflation rose unexpectedly to 3.5 percent from 3.4 percent in February, the Office for National Statistics revealed. Economists had expected the annual rate to hold steady at 3.4 percent.

In other economic news, the U.S. Commerce Department said new privately-owned housing starts came in at a seasonally adjusted annual rate of 654,000, a 5.8 percent drop from February levels. Additionally the February figures were revised down slightly from the 698,000 rate initially reported to 694,000. The March rate of new housing starts comes in well below the expectations of most economists, who had predicted a slight uptick to a rate of 700,000.

by RTT Staff Writer

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