Oil prices jumped more than 2 percent Thursday as investors cheered political shake-ups in Greece and Italy, and layoffs appeared to be easing in the U.S.
Benchmark crude rose $2.24, or 2.4 percent, to $98.08 per barrel in New York, while Brent crude increased 87 cents to $113.18 a barrel in London. Major stock indexes rose in afternoon trading as well.
Greece and Italy turned to economists to lead them out of their debt crises. Greece chose Lucas Papademos as prime minister. In Italy, Mario Monti received increasing support to replace outgoing Prime Minister Silvio Berlusconi.
Those countries continue to face massive financial hurdles, but the leadership changes were taken as a sign that Italy and Greece are serious about reducing their debts. A default in either country would be devastating for the world economy, possibly leading to bank failures, a drop in spending and weaker oil demand elsewhere.
Investors were also encouraged to see that Italy could still raise money by selling nearly $7 billion in 12-month bonds. The interest rate was well below analysts' expectations, implying stronger-than-expected confidence in the Italian economy.
"Their economy still has a lot of problems, but that bond sale showed it's not as bad as feared," PFGBest analyst Phil Flynn said.
There was also some upbeat economic news in the U.S. on Thursday. The Labor Department said that the number of people applying for jobless benefits fell last week to 390,000 _ the lowest level since April.
At the pump, retail gasoline prices rose nearly a penny to $3.439 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is about 55 cents cheaper than its peak price in May, but it's still almost 58 cents higher than a year ago.
In other energy trading, heating oil rose 6 cents to $3.1560 per gallon, while gasoline futures fell less than a penny to $2.6384 per gallon. Natural gas rose 1 cent to $3.66 per 1,000 cubic feet.