Oil above $85 on economic news and weaker dollar

AP News
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Posted: Aug 23, 2011 4:55 PM
Oil above $85 on economic news and weaker dollar

Oil rose slightly Tuesday on encouraging global economic news.

Prices climbed following reports of better-than-expected manufacturing activity in China and Europe. And stocks rose in the U.S. ahead of an expected announcement from the Federal Reserve on Friday about stimulating the nation's economy.

Oil's rise was tempered by uncertainty about Libya, where unrest continued as the Gadhafi regime appeared near collapse.

An end to the country's six-month rebellion would clear the way for oil exports to resume, but analysts cautioned that it will likely take more than a year for oil to begin flowing at levels that would affect prices.

"Crude from Libya is going to be a story for 2012 or 2013. Not today," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

Fighting during the last six months has all but stopped activity in Libya's oil fields. The country previously supplied about 1.5 million barrels per day for world markets. That's roughly 2 percent of daily global oil demand.

Benchmark West Texas Intermediate crude rose $1.02 to finish at $85.44 per barrel in New York. Brent crude, which is used to price oil produced abroad, increased 95 cents to $109.31 per barrel in London.

Meanwhile, U.S. gas pump prices rose Tuesday to a national average $3.572 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 86.4 cents more expensive than the same time last year.

Motorists have been using less gasoline this year because of higher prices.

In other energy trading, heating oil rose 3.18 cents to end at $2.9425 per gallon and gasoline futures added 4.15 cents to finish at $2.8766 per gallon. Natural gas rose 10.4 cents to end the day at $3.993 per 1,000 cubic feet.