Oil prices rise on economic news

Oil prices rose sharply Thursday on hopes that the economies of the United States and Europe could recover and avoid another recession. Associated Press reported on Thursday, that jobless claims fell and factory orders rose in the US, and a key interest rate was cut in Europe.In New York benchmark crude rose by $1.56 to end the day at $94.07 per barrel. Brent crude rose by $1.49 to finish at $110.83 a barrel in London.Oil prices and stock markets also rose on news that a plan to tackle the European debt crisis might not be put to a vote in Greece that could scuttle the deal."The market just lives on the latest headlines coming out of Europe," an independent oil analyst and trader, Mr.Stephen Schork, said.In a move that surprised markets, the European Central Bank cut its benchmark interest rate to 1.25 per cent from 1.5 per cent. The aim is to keep European economies from falling into recession. Low interest rates make it cheaper for businesses to borrow money to invest in new factories, materials, technology and jobs.The Labour Department reported that the number of people who applied for unemployment benefits dipped slightly last week. Applications fell by 9,000 to 397,000. Thats the lowest level in five weeks. And the Commerce Department said factory orders rose in September. A key category that tracks business investment had the biggest jump in six months.When economies grow, demand for gasoline, diesel and jet fuel rises as people travel more and businesses ship more goods.Still, analysts say oil demand has not yet picked up, and oil producers are easily keeping up with global oil demand that is turning out to be less than originally expected for the year. Even demand in China, which has been rising sharply and pushing oil prices higher in recent months, has shown signs of weakening.This suggests oil prices should be lower. But in recent weeks, oil prices have tracked stock markets closely and risen sharply with them. The price of crude has risen more than $15 per barrel, or 19 percent, since the beginning of the month.
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