Oil rebounds 2 pct.on encouraging economic news

Friday, September 23, 2011, Vol. 35, No. 38

NEW YORK (AP) — Oil rebounded by 2 percent Thursday following encouraging economic news in the U.S. and Europe.

The Commerce Department said the U.S. economy grew faster in the spring than previously estimated, while the Labor Department said that the number of people seeking unemployment benefits fell sharply last week.

Meanwhile, German lawmakers took a major step toward dealing with the region's debt crisis by strengthening a bailout fund. That eased worries that Europe's debt problems could spread and lead to another recession.

Benchmark crude rose $1.60, or 2 percent, to $82.81 per barrel in New York. Brent crude, which is used to price oil that's produced overseas, was 60 cents higher at $104.41 a barrel in London.

Thursday's rise continues the roller coaster ride for oil prices this month. Oil tumbled 8 percent from Wednesday to Friday last week, then rebounded 6 percent by Tuesday, then fell nearly 4 percent on Wednesday.

Tepid economic growth in the U.S. and other major world economies has forced experts to backtrack on demand forecasts for this year. As concerns of another recession crept into energy markets, traders stayed focused on the European debt crisis and government reports on the state of the U.S. economy.

"The fear factor has simply gone up," independent oil analyst Jim Ritterbusch said. "I've never seen volatility like this, and I've been watching oil for 28 years."

An extended rise or drop in oil will eventually affect gasoline prices. So far, oil hasn't moved by much, wavering between about $80 and $90 a barrel for the past two months.

Retail gasoline prices have dropped in that time, as they typically do at the end of the summer driving season. The national average fell a penny on Thursday to $3.455 per gallon, according to AAA, Wright Express and Oil Price Information Service.

A gallon of regular hit a 2011 peak of $3.98 a gallon on May 5. It's down from 53 cents from that, but still 76 cents higher than the same time last year.

In other energy trading, natural gas futures were down a penny at $3.787 per 1,000 cubic feet. Prices held steady after the government reported that natural gas supplies last week rose more than analysts expected.

Heating oil rose 1.68 cents to $2.8439 per gallon and gasoline futures were virtually unchanged at $2.5757 per gallon.