Oil rises as concerns ease for eurozone

AP News
Posted: Sep 15, 2011 3:15 PM
Oil rises as concerns ease for eurozone

Oil climbed near $90 per barrel Thursday on some potentially positive developments in Europe that could help stabilize a fragile economic situation.

The European Central Bank said it will provide banks with enough cash to make lending easier. The ECB coordinated its efforts with the U.S. Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank to offer three-month dollar loans to banks through the end of this year.

Fears of a Greek bankruptcy also subsided as France and Germany reaffirmed their support for the country, insisting that it remains an "integral" part of the eurozone. Greece relies on emergency funds from the European Union.

The news pushed the dollar lower. And oil, which is priced in U.S. currency, tends to rise as the dollar falls and makes barrels cheaper for investors holding foreign money.

Benchmark crude added 49 cents to end the day at $89.40 per barrel in New York while Brent crude jumped $2.65 to finish at $112.30 in London.

"It's a dose of good news," independent analyst Jim Ritterbusch said. He warned, however, that Europe is far from solving its myriad economic problems. Investors still worry that Greece's financial troubles will spread to its neighbors and further slowdown a eurozone economy that consumes almost 18 percent of the world's oil.

Thursday's announcements out of Europe outweighed a slew of troubling economic reports released in the U.S.

The government said the number of people applying for unemployment benefits jumped last week to the highest level in three months. And industrial production ticked up 0.2 percent last month, lower than July's 0.9 percent increase.

The Federal Reserve Bank of Philadelphia also said manufacturing in the mid-Atlantic region contracted in September for the third time in four months.

U.S. drivers continue to pay much more this year for gasoline. At $3.623 per gallon, retail gasoline is 89.2 cents higher than it was last year. The Oil Price Information Service estimates that Americans will pay a record $492 billion for gasoline in 2011.

In other commodities trading, natural gas fell 16.1 cents, or 4 percent, to end at $3.878 per 1,000 cubic feet. Prices tumbled after the government said that U.S. supplies fell more than expected. The Energy Information Administration said U.S. natural gas supplies grew by 87 billion cubic feet last week.

Heating oil rose 7.96 cents to end at $3.0246 per gallon and gasoline futures increased 5.7 cents to finish at $2.7828 per gallon.