Oil prices rose sharply Thursday on new signs that the U.S. economy has rebounded, though the amount of excess crude continues to grow and there are few signs that actual demand for it has increased significantly.
Benchmark crude for December delivery rose $2.41 to settle at $79.87 a barrel on the New York Mercantile Exchange, after hitting a day high of $80.46 earlier in the session. The contract fell $2.09 to settle at $77.46 on Wednesday.
The Commerce Department said the U.S. economy grew at a 3.5 percent pace in the third quarter, the best showing in two years, fueled by government-supported spending on cars and homes. The report delivered the strongest signal yet that the economy entered a new, though fragile, phase of recovery and that the worst recession since the 1930s has ended.
“Any sort of encouragement with the economy is potentially bullish for oil,” said oil trader and analyst Stephen Schork.
At the same time, global oil companies have reported that crude production grew during the quarter and American Electric Power, one of the biggest U.S. utilities, said Thursday that electricity demand from industrial customers remains weak, but is showing signs of picking up.
Since last week, crude has retreated from $82 a barrel, the high for 2009, as the U.S. dollar gained back some of its losses from recent months.
The dollar fell Thursday, one of the reasons oil prices have soared this year. Oil is largely bought and sold in dollars, which allows investors holding currencies like the euro or yen to buy more crude when the dollar falls.
In other Nymex trading, heating oil rose 5.73 cents to settle at $2.0542 a gallon. Gasoline for November delivery added 3.26 cents to settle at $2.019 a gallon. Natural gas for December delivery gave up less than a penny to settle at $5.062 per 1,000 cubic feet.
In London, Brent crude for December delivery rose $2.18 to settle at $78.04 on the ICE Futures exchange.
