Oil Extends Prior-Week Gains As China Spurs Demand Hopes

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The price of crude oil ended higher Monday amid improved sentiment following the Chinese central bank's decision to increase the flexibility of its currency yuan by relaxing its fixed peg to the dollar.

The move is expected to increase the purchasing power of Chinese consumers, which could result in improved demand for commodities.

However, the prices backed off significantly from the day's best levels as the dollar strengthened against the euro.

July crude oil settled up $0.64 at $77.82 a barrel on the New York Mercantile Exchange, after touching a high of $78.92.

The most active August contract added $0.35 to $78.61 a barrel.

Oil prices gained 3.4% last week, extending their recovery from $68 level reached last month but remain considerably lower compared to the yearly high near $87.

No major economic data were released today in the US, but traders are awaiting a slew of reports later in the week including interest rate decision from the FOMC and the final GDP reading for the first quarter. (Provided by RTTNews)