Oil prices rise on encouraging economic news…

NEW YORK — Oil prices rose Friday on encouraging economic news from the U.S. and Europe, raising hopes for stronger demand in the months to come.

Benchmark crude rose $1.33 to finish the day at $87.40 per barrel in New York. Brent crude, used to price many international kinds of oil, fell 20 cents to end at $109.56 per barrel in London.

Benchmark crude prices rose as European finance ministers approved the next round of bailout loans for Greece, which should head off a disastrous default that could impact other countries in the region and slow their economies.

In the U.S., the government said jobless rates fell in half of the states last month as hiring picked up. That pointed to rising demand for oil and gas as unemployment lines shrink.

On Wall Street, stocks surged following strong earnings reports. The Dow Jones industrial average was up more than 220 points, or 2 percent, in afternoon trading.

At the pump, gasoline prices fell less than a penny Friday to a national average of $3.468 per gallon. Pump prices are about 64 cents higher than a year ago. Drivers in the West and the Northeast are paying the highest prices for gas. Prices are lowest in the South.

In other energy trading, heating oil fell 1.26 cents to finish at $3.0175 a gallon. Gasoline futures rose about a penny to end at $2.6846 a gallon. Natural gas was virtually unchanged at $3.6290 per thousand cubic feet.

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6 thoughts on “Oil prices rise on encouraging economic news…

  1. Avinash says:

    This is a microeconomic article as it focuses on the oil market:
    This is a clear example of how expectations affect the demand curve (and therefore the price) of an item. There is an expectation for a higher demand because of a summit of European leaders who met to solve the debt crisis. Another reason would be a possible growth in Libya’s oil output.

    If demand is going to increase, so will the price; but this causes more demand to buy oil before the price increases, which only increases the price further. In this case, benchmark crude rose by $1.33.

    • Avinash says:

      I commented on Åsa’s blog.

  2. mharikg says:

    this is a good comment Avinash, but is the oil a natural supply and demand market, when OPEC controls the amount of oil that is released into the market?

    • Avinash says:

      I’m quite sure OPEC just makes sure the price is at equilibrium; it does not control supply (there is a minimum quota) or demand. (P.S. I might not be completely right)

  3. good comments. Does the fact that the pump prices are 64 cents higher than a year ago have an effect on the demand for gasoline? Won’t this decrease demand?

  4. Excellent comments and questions. Oil is considered to be indeed controlled by OPEC in what is a called a collusive Oligopoly, therefore acting like a monopoly.

    you score 5

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