Oil rose to nearly $114 a barrel in volatile trading Thursday, pushed higher by a weaker dollar, before giving up most of its early gains. Gas pump prices rose for the 37th straight day.
Benchmark West Texas Intermediate crude added 10 cents to settle at $112.86 per barrel on the New York Mercantile Exchange after rising as high as $113.97. In London, Brent crude fell 11 cents to settle at $125.02 on the ICE Futures exchange.
The dollar recovered some ground after hitting a 16-month low against the euro on Thursday. Oil generally rises as the dollar falls, because crude is priced in dollars and becomes more appealing to buyers with foreign currencies as the dollar weakens.
The dollar dropped after Fed chairman Ben Bernanke said Wednesday that interest rates will stay low "for an extended period." Energy consultants Cameron Hanover said, "Traders saw his comments as being bullish for stocks (equities), commodities and foreign currencies."
At the gas pump Thursday, the national average for a gallon of regular rose almost a penny, to $3.89. That's 30 cents more than a month ago and $1.02 more than a year ago. The average is above $4 a gallon in eight states and the District of Columbia.
Bernanke said he didn't think gasoline prices will keep rising at the current pace, and he expects them to stabilize or fall eventually. He didn't say when, but some analysts think there are signs that pump prices will fall after rising for the next few weeks.
Cameron Hanover notes that the Energy Department's weekly petroleum report showed a big surge in imported oil. "It suggests that refiners are about to get serious about increasing run rates." That means more gas will be available. Refineries have been running at lower rates for seasonal maintenance and to reformulate gasoline blends for summer driving.
JP Morgan Global Commodities Research also sees refineries ramping up production soon. Gasoline supplies should increase just as high pump prices further discourage driving. MasterCard SpendingPulse's weekly survey found drivers buying less gas in the past month compared to the same time a year ago. The combination of refineries producing more gasoline as drivers shy away from the pump could push down the cost of filling up.
The Energy Department on Thursday released its weekly report on how much natural gas the nation has in storage. Supplies rose by 31 billion cubic feet. That was less than analysts expected and the price of natural gas futures contracts rose almost 3.5 percent. Energy analyst Stephen Schork noted that cooler weather in the Midwest last week had furnaces running, while warm weather in the South increased gas demand at utilities to generate electricity for cooling.
Natural gas rose 15.7 cents to settle at $4.633 on the Nymex. In other trading, heating oil lost less than a penny to settle at $3.2459 per gallon, and gasoline futures rose 1.14 cents to settle at $3.3696 per gallon.