Oil prices up 12 percent in 2 weeks Oil rises to near $80 a barrel; crude has surged 12 percent in 2 weeks ap y Chris Kahn, AP Energy Writer , On Friday February 19, 2010, 5:28 pm EST
NEW YORK (AP) -- Oil prices are again flirting with $80 a barrel after a two-week rally fueled by promising economic reports and worries that troubles in Europe and the Middle East could eventually tighten supplies.
Benchmark crude for March delivery added 75 cents to settle at $79.81 a barrel on the New York Mercantile Exchange. The price of the March contract, which ends Monday, has increased by 12 percent since Feb. 5.
Most of the trading already has moved to the April contract, which added 64 cents Friday to settle at $80.06 a barrel.
An extended surge in crude prices will force gasoline and other fuels higher as well. Retail gas prices already have started to increase this week, and experts predict the national average will hit $3 a gallon this summer.
The rally in crude comes even though the country is still flush with very large supplies. Reports of growth in home construction, industrial production and manufacturing have boosted confidence among investors that Americans will regain their appetite for fossil fuels in the second half of the year.
Meanwhile, investors continued to focus on problems with refineries in France, where workers at a refinery for oil giant Total have been striking since Jan. 12. The U.S. imports gasoline and other fuels from Europe, and concerns over disruptions in European refining have helped push energy prices higher.
Also, the United Nations' International Atomic Energy Agency said Thursday that Iran may be working on a nuclear warhead, raising concerns about a military build up in the region and the availability of oil supplies from the Persian Gulf.
"The fear of Iran has always been instrumental in the price run-ups of 2007 and 2008, fueling the 'what-if' scenarios that are necessary for bull runs and this year might not be different," said analyst Olivier Jakob of Petromatrix in Switzerland.
Energy prices dipped earlier in the day following Thursday's Federal Reserve announcement that it will bump up the rate that banks must pay for emergency loans.
The dollar soared to its highest level since May following the announcement. And crude, which is priced in dollars, tends to fall in price as the dollar rises and makes oil barrels tougher to buy for investors holding foreign money.
The Fed announcement was followed by a Labor Department report Friday morning that said consumer prices excluding food and energy fell in January for the first time since December 1982. That tempered concerns about future inflation, analyst Phil Flynn said.
At the pump, retail gasoline prices increased for the second day this week, adding less than a penny overnight for a national average of $2.623 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 11.4 cents cheaper than a month ago and 67.4 cents more expensive than a year ago.
In other Nymex trading in March contracts, heating oil rose 1.83 cents to settle at $2.0699 a gallon, and gasoline added 1.65 cents to settle at $2.0857 a gallon. Natural gas gave up 12.8 cents to settle at $5.044 per 1,000 cubic feet.
