Oil prices briefly pass $69 per barrel

SIOUX FALLS, S.D. (AP) - Oil prices briefly passed $69 per barrel Tuesday in a week long rally that appears short on fundamentals, yet exceedingly full of momentum.

Average retail gasoline prices continued to march upward: A gallon now costs about 46 cents more than it did a month ago.

After peaking at $69.05 Tuesday afternoon, a price not seen since early November, benchmark crude for July delivery fell 3 cents to settle at $68.55 a barrel on the New York Mercantile Exchange.

There have been a few indications that the economy is mending in some of the hardest hit sectors.

Pending sales of existing homes showed the biggest jump in nearly eight year, the National Association of Realtors reported Tuesday.

That report came on the heels of manufacturing data Monday that showed some improvement both here and in China, two major energy consumers.

Yet much of the momentum on Nymex appears to be fueled by the weakening dollar, which hit a new low for the year Tuesday, and an influx of money from speculators.

Investors buy commodities like oil and gold as a protection against inflation and dollar weakness.

Oil prices have risen every day since May 21 on snips of moderately good news from manufacturers, home builders and the U.S. government.

"What kind of news? Well any kind of news because we seem to be living in a world where good economic news for oil is bullish and bad economic news might be bullish too," said Phil Flynn, an analyst at Alaron Trading Corp.

For instance, even though unused crude in storage remains near 19-year highs, which would typically drive prices down, levels have fallen for the past three weeks, according to the Energy Department.

That is typical for this time of year, however.

And there are some signs that major oil exporting countries, squeezed for months by low energy prices, have been bumping up production.

Analysts expect another draw down of 2 million barrels when the Energy Information Administration reports crude levels Wednesday, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Prices at the pump added slightly more than a penny overnight to hit $2.525, according to auto club AAA, Wright Express and Oil Price Information Service. That's a dime higher than last week and well above the $2.07 that gas cost just a month ago.

Still, a gallon of gas last year at this point was three cents shy of $4 per gallon.

In other Nymex trading, gasoline for June delivery rose less than a penny to settle at $1.9252 a gallon and heating oil rose 1.24 cents to settle at $1.7979 a gallon. Natural gas for June delivery slid 12.9 cents to settle at $4.12 per 1,000 cubic feet.

In London, Brent prices rose 20 cents to settle at $68.17 a barrel on the ICE Futures exchange.

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Associated Press Writers Alex Kennedy in Singapore and George Jahn in Vienna contributed to this report.