BUSINESS

Oil prices hit 3-month high; White House considers release of oil reserves

08/17/2012 03:50 EDT | Updated 10/17/2012 05:12 EDT
NEW YORK, N.Y. - The price of oil rose to its highest point in three months Friday, topping off four straight days of gains, on signs U.S. consumers are gaining confidence in the economy.

Benchmark West Texas Intermediate crude rose 41 cents in New York to end at US $96.01 a barrel — the first time it's finished above $96 since May 11.

Overall, WTI gained 3.4 per cent this week on positive economic data and a drop in U.S. oil supplies and is up 23 per cent from its late-June low.

The Thomson Reuters/University of Michigan preliminary August index of consumer sentiment released Friday showed confidence at its highest level since May. Most economists had been expecting a decline.

That, combined with surprisingly strong retail sales and housing data, spread hope this week that the U.S. economy is gaining traction. Consumer spending drives roughly 70 per cent of growth.

Word that the Obama administration is considering a release of oil from the Strategic Petroleum Reserve to stem the rising cost of crude appeared to have more impact on Brent crude, which is used to price international varieties of oil.

Brent fell $1.56 to close at US$113.71 on the ICE Futures exchange in London. Before Friday, Brent had climbed more than $10 a barrel this month on concerns about production outages in the North Sea. It's also more influenced by developments in the Middle East.

A senior administration official, who requested anonymity, told The Associated Press on Friday that the government is monitoring gasoline prices to see whether they fall before making a decision to tap strategic reserves.

Gas prices in the U.S. have increased an average of 39 cents since early July, because of an increase in oil prices and refinery and pipeline problems in some regions. Drivers in about 40 states are now paying more for gas on average than at this time a year ago.

The U.S. released oil from its Strategic Petroleum Reserve last summer with only limited success. Oil prices dropped nearly five per cent when the government announced the release of 30 million barrels from the reserve on July 23.

However, prices rebounded over the next eight days and oil ended the year higher than it started.

Also on the New York Mercantile Exchange, heating oil fell three cents to finish at US$3.09 a U.S. gallon (3.79 litres); wholesale gasoline fell 5.6 cents to end at US$3.03 a gallon and natural gas fell less than a penny to finish at $2.72 per 1,000 cubic feet.

(TSX:ECA), (TSX:IMO), (TSX:SU), (TSX:HSE), (NYSE:BP), (NYSE:COP), (NYSE:XOM), (NYSE:CVX), (TSX:CNQ), (TSX:TLM), (TSX:COS.UN), (TSX:CVE)