Oil prices jumped on Friday to a new high for the year after Federal Reserve Chairman Ben Bernanke said that the US economy is nearing a recovery and other economic data backed him up. Benchmark crude for October delivery surged $1.81 to $74.72 after Bernanke spoke at an annual Fed conference in Jackson Hole, Wyoming. By midday, oil was trading at $73.91, topping the previous annual high of $73.23 set on June 11.
Oil started climbing early in the morning after financial information company Markit said its composite purchasing managers' index showed the European economy was stabilizing. "If Europe's coming out of recession, the euro could get even stronger," analyst Phil Flynn said. "That means more demand for oil."
And the dollar did fall against the euro to end the week, effectively making dollar-based oil cheaper across the globe. That created its own momentum and drew a lot of investor money into crude, meaning the price for gasoline and other fuels will likely move up as well.
US gasoline prices have flattened and few expect a major run on prices as the driving season winds down.
Retail gas prices were almost unchanged, rising a hundredth of a cent to a new national average of $2.625 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. In addition to the falling dollar and other upward pressures on energy prices, new housing data showed that people are buying. Just as Bernanke began to speak, the National Association of Realtors said that home resales posted the largest monthly increase in at least 10 years, which may have helped push energy prices higher.
Crude this year has tended to jump even marginally good economic news. It has been slightly more than a year since a barrel of crude soared close to $150 per barrel and few people believe that at some point, demand for energy will not rebound strongly. The question is when.
Earlier this week, the US government reported that crude in storage, which had been building for weeks, fell by a surprising 8.4 million barrels as refiners cut back on petroleum imports. Crude prices jumped sharply.
In other Nymex trading, gasoline for September delivery added less than a penny to $1.9874 a gallon and heating oil for September delivery added 2.21 cents to $1.9073 a gallon. Natural gas for September delivery gave up a penny to $2.935 per 1,000 cubic feet. In London, Brent prices rose 95 cents to $74.28 a barrel on the ICE Futures exchange.