Oil price rises to near $89 on hopes for stimulus
The Energy Information Administration reported that the nation's crude supply grew by 2.7 million barrels last week.
By CHRIS KAHN
The Associated Press
NEW YORK — Oil prices changed course Wednesday as gloomy economic news raised hopes that global central banks will take more steps to stimulate growth.
Benchmark U.S. crude added 47 cents to end the day at $88.97 per barrel in New York. It fell below $88 earlier when a report showed a significant increase in U.S. oil supplies. Brent crude increased by 96 cents to finish at $104.38 per barrel in London.
Phil Flynn, a commodity analyst at Price Futures Group, said investors are betting that the Federal Reserve and its counterparts around the globe will take action soon. Without more stimulus the global economy will be weighed down by recessionary conditions in many parts of Europe, a slowdown in Chinese manufacturing and sinking U.S. consumer confidence.
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Fed Chairman Ben Bernanke said earlier in July that the central bank is considering new measures to boost consumer spending and borrowing. But he didn't outline what steps the Fed would take.
"Who knows if it will happen," Flynn said of the Fed. "This could just be a lot of hype."
There wasn't any other reason for oil to rise. The U.S. added to its ample supplies of oil last week. The Energy Information Administration reported that the nation's crude supply grew by 2.7 million barrels last week. Analysts were expecting supplies to fall by 250,000 barrels, according to a survey by Platts, the energy-information arm of McGraw Hill.
U.S. crude supplies have grown this year to the highest levels since 1990.
Gasoline supplies rose more than expected. The EIA said that gasoline supplies increased by 4.1 million barrels last week. Analysts were expecting supplies to grow by only 750,000 barrels.
Meanwhile retail gasoline increased by nearly a penny to a national average of $3.485 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded has increased by 15.5 cents this month, though it's still cheaper than at the same time last year.
In other futures trading, heating oil added 1.96 cents to end at $2.844 per gallon while gasoline lost 3.19 cents to finish at $2.7929 per gallon. Natural gas fell by 11.7 cents to end at $3.07 per 1,000 cubic feet.
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