Oil rises, US considers release from reserves
NEW YORK (AP) — The price of oil rose to its highest point in three months Friday, topping off four straight days of gains, on signs US consumers are gaining confidence in the economy.
Benchmark oil rose 41 cents in New York to end at US$96.01 per barrel — the first time it’s finished above US$96 since May 11. It gained 3.4 per cent this week on positive economic data and a drop in US 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 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 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 US$1.56 to close at US$113.71 a barrel on the ICE Futures exchange in London. Before Friday, Brent had climbed more than US$10 per 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 because they were not authorized to speak publicly, told The Associated Press Friday that the US is monitoring gas prices to see whether they fall before making a decision to tap strategic reserves.
White House spokesman Josh Earnest told reporters Friday that the move is an option, but he didn’t elaborate.
Gas prices in the US have increased an average of 39 cents a gallon (3.8 liters) 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 US released oil from its Strategic Petroleum Reserve last summer with only limited success. Oil prices dropped nearly 5 per cent when the government announced the release of 30 million barrels from the SPR on July 23. Prices rebounded over the next eight days. Oil ended the year higher than it started.