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Oil prices rise as EU closes in on new treaty

AP News
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Posted: Dec 09, 2011 3:50 PM
Oil prices rise as EU closes in on new treaty

Oil prices rose for the first time in three days, as the European Union moved closer to a plan that promises to fix the eurozone debt crisis.

Benchmark crude rose $1.07 Friday to end the week at $99.41 per barrel in New York. Brent crude, which is used to price foreign oil imported by some U.S. refineries, added 53 cents to finish at $108.47 in London.

Massive debts in several European nations have rattled investors for months. Experts say the eurozone is headed back into recession, and a drop in energy demand and consumer spending is inevitable given the series of government spending cuts under way in numerous eurozone nations.

It's still unclear how bad the economy will get in Europe and whether leaders can halt spiraling debts that threaten the banking system. Oil prices and stock markets have wavered most of the week as perceptions shifted about the proposed financial reforms within the eurozone.

After falling Wednesday and Thursday, oil prices turned higher as the European Union closed in on a new treaty that would further integrate their finances in an attempt to save the euro. Almost all of the 27 countries in the EU, with the exception of the U.K., support a more intimate financial relationship that would allow more central control and require balanced budgets.

Major U.S. stock indexes rose between 1 and 2 percent in afternoon trading.

Natural gas prices dropped by 4 percent as some parts of the country continued to see above-average temperatures. Until chillier weather sets in, homes and businesses won't need to crank up the heat, and that weakens demand for natural gas.

"We're still walking around in shorts over here," said Stephen Schork, an independent oil analyst and trader in Villanova, Pa. "We haven't had winter yet." Colder air is pushing into the Midwest and the Northeast this weekend.

Natural gas prices fell by 14 cents to end at $3.3170 per 1,000 cubic feet in New York.

Retail gas prices were unchanged at a national average of $3.29 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is about 69 cents cheaper than its peak price near $4 per gallon in May, but it's still almost 32 cents higher than a year ago.

In other energy trading, heating oil fell by 1.73 cents to end at $2.9125 per gallon. Gasoline futures rose by 2.95 cents to finish at $2.5961 per gallon.