Oil jumps 4 percent on positive US, European news

AP News
Posted: Oct 27, 2011 4:14 PM
Oil jumps 4 percent on positive US, European news

Oil jumped more than 4 percent Thursday as the U.S. economy grew and Europe appeared to turn the corner on its debt crisis.

Benchmark crude rose $3.76, or 4.2 percent, to end the day at $93.96 per barrel in New York. That's the highest it's been since the first week of August. Brent crude, which is used to price oil that's imported into the U.S., rose $3.17, or 2.9 percent, to finish at $112.08 in London.

Prices soared after European leaders announced an agreement to reduce Greece's debt and head off a default. After hours of intense negotiations, the Europeans unveiled a plan to cut Greek debt, bolster the continent's banks to handle losses on Greek bonds and reinforce a European bailout fund.

In the U.S., the government said the economy grew at an annual rate of 2.5 percent in the July-September quarter. That's the strongest growth this year and quieted concerns that the country is headed for another recession.

Stock markets also soared on the news. The Dow Jones industrial average, the S&P 500 and the NASDAQ all closed more than 3 percent higher.

Oil hit a 2011 low earlier this month on concerns that Western nations might drop back into a second recession. Growing European debt problems threatened to plunge the entire region into a banking crisis, and the U.S. economy was barely growing. The headlines on Thursday appeared to relieve those concerns, at least for now.

"Everyone's feeling pretty good," PFGBest analyst Phil Flynn said. "But who knows what will happen next week?"

Flynn said it's premature to signal the all-clear for the world economy. The U.S. still isn't growing fast enough to reduce its 9.1 percent unemployment rate, and while austerity measures may help reduce European economies, they won't boost energy demand.

At the pump, retail gasoline prices rose to a national average of $3.444 per gallon, according to AAA, Wright Express and Oil Price Information Service.

In other energy trading, heating oil prices rose 8.27 cents, or 2.7 percent, to finish at $3.1037 per gallon, while gasoline futures increased 9.04 cents to end at $2.742 per gallon. Natural gas futures fell 6.6 cents to end at $3.524 per 1,000 cubic feet.