Oil prices continued to surge Monday, after China moved to end its two-year peg to the dollar. Crude rose $1.32 to $78.50 a barrel on the New York Mercantile Exchange, according to AP. Traders anticipate a stronger yuan will make dollar-based commodities such as oil cheaper in China and bolster demand in the world's second biggest market for oil. The policy shift also suggests China officials believe their economy is growing enough to absorb any slowdown in exports that a stronger currency may cause. China's oil demand hit a record of about 8.6 million barrels per day in May, an increase of 9.8 percent from May 2009, according to Platts, the energy information arm of McGraw-Hill Cos. In the United States, retail prices for gasoline have climbed over the past week and are headed back toward a national average of $2.80 to $2.90 per gallon with higher prices on the West Coast, said Tom Kloza of the Oil Price Information Service. Prices dropped for about six weeks as oil prices fell over worries that the European debt crisis could spread and crush the global economic recovery and demand for crude. Those worries have since ebbed, oil is rising again and the stock market has started to recover some of its recent losses. Kloza said he expects the price increases to be modest. «Much higher prices would roil the economic picture, and the oil price rally has been largely on the coattails of the stock market recovery,» he said. Prices rose 0.3 cent to a national average of $2.737 per gallon on Monday, according to AAA, Wright Express and Oil Price Information Service. Prices have risen 3.9 cents in the past week and are 7.5 cents below levels of a month ago. Pump prices are 4.4 cents higher than a year ago. The government's Energy Information Administration will release its weekly report on retail gasoline prices later Monday. In other Nymex trading, heating oil rose 3.42 cents to $2.1631 a gallon, gasoline gained 3.25 cents to $2.1801 a gallon and natural gas jumped 10.2 cents to $5.099 per 1,000 cubic feet. Brent crude was up $1.26 at $79.49 on the ICE futures exchange.
