Oil gains; AAA says prepare for higher pump prices
NEW YORK (AP) — The price of oil rose Thursday as a positive report on the U.S. labor market and more cold temperatures boosted expectations of higher demand for fuel.
Meanwhile, the auto group AAA reminded drivers that spring is on the way — and along with it, higher gasoline prices.
Benchmark U.S. crude for March delivery rose 46 cents to close at $97.84 a barrel on the New York Mercantile Exchange, after earlier rising near $99.
The Labor Department said the number of people applying for U.S. unemployment benefits declined 20,000 last week to 331,000, suggesting that Americans are facing fewer layoffs and better job prospects. Those figures came a day before a widely anticipated report on January employment.
With chilly temperatures across the middle of the country and into the Northeast, demand for heating oil remains strong. That should boost refineries’ need for crude oil.
The cool weather has had the opposite effect on gasoline demand: drivers hunkering down in their homes don’t use the car. The average price for a gallon of gas in the U.S. is $3.27, down 5 cents from Jan. 1.
Still, AAA said Thursday that gasoline prices will soon be on their way up. Refineries are starting to shut down for winter maintenance, which reduces supply. They also gradually switch to more expensive summer blends of gasoline over the coming weeks.
“Winter weather, weak demand and sufficient supplies have kept gas prices relatively low recently, but this trend may not last much longer,” said Bob Darbelnet, President and CEO of AAA.
This rise in price happens nearly every spring. This year, AAA predicts the nationwide average price will peak between $3.55 and $3.75 per gallon, lower than last year’s high of $3.79, reached on Feb. 27. Right now, gas is on average 28 cents cheaper than at this time last year.
For all of 2014, AAA expects the nationwide average to be at least five cents cheaper than last year’s $3.49.
Natural gas prices were volatile again. The price rose 7 percent to $5.40 per 1,000 cubic feet in the morning, but then fell sharply. The Energy Department said the nation’s supply of natural gas dropped by 2.62 billion cubic feet last week. But analysts were expecting a decline of at least 273 billion cubic feet, according to Platts. Natural gas futures fell 10 cents to close at $4.93 per 1,000 cubic feet.
Brent crude, a benchmark for oil sold internationally, gained 94 cents to $107.19 on the ICE exchange in London.
In other energy futures trading on Nymex:
— Wholesale gasoline gained 4 cents to $2.68 a gallon.
— Heating oil was flat at $3.00 a gallon.