Oil above $82 on positive news for Europe banks

AP News
Posted: Oct 06, 2011 3:40 PM
Oil above $82 on positive news for Europe banks

Oil prices rose Thursday as Europe's central bank tried to strengthen the region's financial system.

Benchmark crude jumped $2.91, or 3.7 percent, to finish at $82.59 per barrel in New York, while Brent crude rose $3, or 2.9 percent, to end at $105.73 in London.

It was the second straight day of higher prices after they plummeted to 12-month lows earlier in the week. The drop came as credit problems in the eurozone rattled energy markets. Investors worry that a Greek default could spark a wider banking crisis that threatens the U.S. economy and weakens demand for oil.

In an effort to deal with that the European Central Bank on Thursday offered new emergency loans to banks that could shield them from possible losses.

Europe's financial problems have scared many investors out of oil markets this year, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. When Europe's situation appears to improve, investors rush back in, lifting prices, Kloza said.

A stronger Europe and world economy means demand for oil will rise.

The U.S. economy also showed signs of strength, as major retailers posted strong sales increases in September.

Meanwhile retail gasoline prices fell by less than a penny to a national average of $3.392 for a gallon of regular, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has dropped almost every day in the last four weeks. It's down more than 7 percent, but it's still 64 cents higher than at the same time last year.

In other energy commodities trading, heating oil rose 8 cents to finish at $2.86 per gallon and gasoline futures rose 12 cents to end at $2.69 per gallon. Natural gas rose 3 cents to end the day at $3.60 per 1,000 cubic feet.