Oil rises to $80 for first time since November

AP News
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Posted: Dec 31, 2009 3:27 PM

Oil prices ended 2009 with a bang, surging by about $10 a barrel in the final two weeks as the country cut into its hefty crude supply.

On Thursday benchmark crude for February delivery added 8 cents to settle at $79.36 a barrel on the New York Mercantile Exchange. Crude barrels, which touched $80 earlier in the day, are 71 percent more expensive than they were at the beginning of the year.

Prices have rallied since March, moving opposite the dollar. Oil is priced in dollars, and when the dollar slumped this year, crude contracts became easier to buy for investors with foreign money. Investors also pumped money into energy commodities as a hedge against inflation.

Oil got an additional boost in December as temperatures dropped and homeowners cranked up the heat. The country's oil stockpile, which ballooned in May to the highest level since 1990, shrank this month by 10.1 million barrels.

Oil prices perked up in response, and they pulled pump prices higher as well.

Retail gas prices finished the year with six straight days of price increases. The national average added 1.6 cents overnight to $2.639, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 1.2 cents more expensive than a month ago and $1.022 more expensive than the same time last year.

The government also said Thursday that new claims for unemployment benefits dropped unexpectedly last week _ an encouraging sign that the economy may soon begin creating jobs and put more motorists on the road.

Meanwhile, natural gas dropped for the fourth straight week, according to the Energy Information Administration. The nation's supply is still well above the five-year average, however, and last week's draw of 124 billion cubic feet was less than what analysts expected.

In other Nymex trading in January contracts, heating oil rose less than a penny to settle at $2.1188 a gallon and gasoline advanced 1.19 cents to settle at $2.0525 a gallon. The February contract for natural gas gave up 13.7 cents to settle at $5.572 per 1,000 cubic feet.

In London, Brent crude for February delivery lost 10 cents to settle at $77.93 a barrel on the ICE Futures exchange.

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Associated Press Writer Pablo Gorondi contributed to this story from Budapest, Hungary.