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Crude jumps nearly $2 after Fed promises to 'do more' for economy

Crude has traded between $94 and $97 per barrel for two weeks, after rising from a low near $77 in late June.

By JONATHAN FAHEY
The Associated Press

8/31/2012

NEW YORK — U.S benchmark crude rose $1.85 to end at $96.47 per barrel on Friday after Federal Reserve Chairman Ben Bernanke made clear in a speech that the central bank will do more to revive the U.S. economy.

Brent Crude, which is used to price oil used by many U.S. refiners, rose $1.92 to $114.57 per barrel.

In a speech at an annual Fed conference in Jackson Hole, Wyo., Bernanke said the economic recovery is "far from satisfactory" but he did not give any timetable for action that might reduce borrowing costs and help stimulate growth.

If the Fed reduces the cost of borrowing, it could boost demand for the energy needed to fuel growth and make oil and other commodities more attractive investments.

"With interest rates near zero, people look for somewhere to put their money. One of those places is the oil market," said energy analyst and consultant Jim Ritterbusch.

Ritterbusch expects them to stay roughly in the $95-per barrel range well into September. World oil demand is rising only slightly, and supplies are adequate. But continued worries over tensions between Iran and the West will keep prices from dropping. Expectations of financial stimulus programs from U.S. and European central banks will also keep the market propped up.

Crude has traded between $94 and $97 per barrel for two weeks, after rising from a low near $77 in late June.

Hurricane Isaac did not have a major effect on crude prices this week, even though almost all of the oil production in the U.S. Gulf of Mexico was halted ahead of the storm. Production is expected to return to normal over the next several days.

Gasoline prices can fall even if oil prices stay relatively high because gasoline demand slows after the summer driving season and refiners can switch to cheaper winter blends of gasoline.

In other Nymex energy futures trading, heating oil rose 5 cents to $3.18 a gallon, while wholesale gasoline climbed 6 cents to $2.97 a gallon. Natural gas rose 5 cents $2.80 per 1,000 cubic feet.

Kevin Jones of The Trucker staff can be reached for comment at kevinj@thetrucker.com.

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