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Crude expected to continue climb

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Associated Press / July 1, 2008

NEW YORK - The price of crude oil hit yet another record on the last day of a tumultuous first half, spurting past $143 a barrel before ending lower on demand fears and a resilient dollar. Crude has shot up nearly 50 percent since the start of the year, in large part on the dollar's troubles, and analysts expect that trend to remain intact as the second half of 2008 begins.

A government report lowering oil and gasoline demand estimates and a dollar hanging tough nullified investor concerns over supply, a fragile global economy, and continued tensions in the Middle East.

"What this shows is that demand destruction in the US is a lot larger than previously thought," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. "There are more signs demand is deteriorating."

Light, sweet crude for August delivery lost 21 cents to settle at $140.00 a barrel on the New York Mercantile Exchange. In early electronic trading, the contract hit a record $143.67.

The Energy Information Administration reported that oil usage in April was lower than previously estimated, falling 4.2 percent to 19.768 million barrels per day from 20.631 million. That was 3.9 percent lower than in April 2007 and the lowest level for the month in six years.

The price of oil, which began 2008 at $96 a barrel, has risen in part on expectations of higher demand in China and other developing nations. But its almost relentless advance has also forced consumers and businesses to cut back the amount of gas and oil they use; it is also posing a threat to US economic growth that could further slice into demand.

Meanwhile, retail gasoline, which has been tracking oil higher, reached a national average of $4.09 a gallon, according to a survey by AAA, the Oil Price Information Service, and Wright Express. The previous record of $4.08 was set June 16

Massachusetts gas prices, however, remained unchanged from last week. AAA Southern New England said a gallon of self-serve, regular unleaded averaged $4.06 in Massachusetts, the same price as the last two weeks.

Chris Reidy of the Globe staff contributed to this report.

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