Benchmark crude for August delivery rose one cent to close at US$108.05 a barrel on the New York Mercantile Exchange. Oil gained $2.10 a barrel this week.
Signs of an improving U.S. economy have helped push the price of oil to the highest level in 16 months. On Friday, oil rose to $109.32, the highest price since March 1, 2012, before pulling back.
Oil has jumped 15 per cent since June 21, when it traded at $93.69, and has pulled up the price of gasoline along with it. Gasoline futures have gained 13 per cent in the same period.
Oil prices have gained support from improved hiring and manufacturing activity in the U.S. A sharp drop in the nation's crude oil supply, signalling an increase in demand, has also boosted energy prices.
Recent gains by West Texas Intermediate, or WTI, the U.S. benchmark oil grade traded on the Nymex, have erased the spread to the Brent contract traded in London from over $13 in April. Brent crude, the benchmark for many international types of oil, was down 63 cents to finish at $108.07 a barrel on the ICE Futures exchange.
Analysts say the U.S. benchmark appears overpriced at the current level, but caution against betting on a near-term drop.
Jim Ritterbusch, president of Ritterbusch and Associates, calls levels above $106 a "mispriced high" considering that U.S. demand growth is a modest 0.5 per cent while U.S. crude production is up 15 per cent year over year. But he says that's no guarantee the price will decline.
In other energy futures trading on the Nymex:
— Wholesale gasoline added one cent to end at $3.12 a gallon.
— Heating oil fell one cent to finish at $3.09 a gallon.
— Natural gas fell two cents to end at $3.79 per 1,000 cubic feet.
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