Oil rises near $98 even as US economy contracts
Oil finished near $98 Wednesday, maintaining the momentum that has driven it to four-month highs and pushed up prices at the pump.
A report that showed the U.S. economy unexpectedly contracted in the fourth quarter tempered the gains a bit. Still, oil rose 37 cents to finish at $97.94 per barrel on the New York Mercantile Exchange. That's the ninth increase in the last 11 trading sessions and oil shows a gain of $6 a barrel for the year so far.
The government also said that crude oil supplies rose by 5.9 million barrels last week, more than twice what analysts expected, as imports increased. Just a few weeks ago a report showing that big an increase in supplies likely would have sunk oil prices. But traders say conditions now favor higher gas prices.
Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said "there's room for additional upside price progress" and he expects "additional strength to the $100 area." Oil hasn't topped $100 a barrel since early May.
He also said a statement from the Federal Reserve reaffirming its commitment to try to stimulate growth by keeping borrowing costs low supported oil.
At the pump, the national average for a gallon of gas jumped 3 cents overnight to reach $3.39 for the first time since Dec. 1. The last time gas rose 3 cents in one day was Aug. 28, when Hurricane Isaac disrupted operations at Gulf Coast refineries, said Tom Kloza, chief oil analyst at Oil Price Information Service. He expects the average to reach $3.43 a gallon by Friday.
Brent crude, used to price international varieties of oil, gained 54 cents to end at $114.90 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
— Wholesale gasoline rose 6 cents to $3.03 per gallon.
— Natural gas rose 8 cents to $3.34 per 1,000 cubic feet.
— Heating oil was up about a penny at $3.12 a gallon.
Pamela Sampson in Bangkok and Pablo Gorondi in Budapest contributed to this report.