The price of oil rose above $97 a barrel Monday following new signals that Europe's economy is on the mend and the ongoing closure of export terminals in Libya.
Benchmark U.S. crude for January delivery rose 84 cents to $97.44 a barrel in midday trading. Brent crude, a benchmark used to price international oil used by many U.S. refineries, rose $1.70 to $110.53.
The average retail price of a gallon of gasoline fell less than a penny to $3.23 per gallon, three cents higher than a month ago and three cents lower than a year ago.
In Europe, business sentiment is rising for the first time in three months, according to a survey of the 17-country eurozone. The monthly purchasing managers' index for the eurozone from financial information company Markit rose to 52.1 in December from 51.7 in November, after two consecutive months of declines. Anything above 50 indicates expansion, which would typically translate into higher demand for crude.
At the same time, Libyan oil terminals that were expected to open last weekend remained shut, reducing expected supplies. A militia from eastern Libya controlling the export hubs said the central government in Tripoli had failed to meet its demands, mainly a share of oil revenues.
Traders will be watching closely the U.S. Federal Reserve's decision Wednesday on whether to maintain its monthly $85 billion in monetary stimulus. There are growing expectations that the Fed could decide to start cutting back following recent strong U.S. economic data reports and signs of an imminent budget agreement in Congress.
Any reduction of stimulus could result in a stronger dollar. That would make commodities priced in dollars, such as crude, more expensive to foreign buyers and down demand.
In other energy futures trading on the Nymex:
- Wholesale gasoline rose 3.2 cents to $2.661 a gallon.
- Heating oil rose 3.8 cents to $3.014 a gallon.
- Natural gas fell 6.7 cents to $4.284 per 1,000 cubic feet.
(Copyright 2013 by The Associated Press. All Rights Reserved.)