The price of oil closed above $98 a barrel for the first time in a month Thursday, as signs of a strengthening U.S. economy prompted expectations of greater demand for oil.
Benchmark U.S. crude for March gained 87 cents to finish the day at $98.23 a barrel on the New York Mercantile Exchange.
Expectations are rising that the 2014 U.S. economy will be the best since the recession ended 4½ years ago. The government said Thursday that growth reached a 3.2 percent annual rate last quarter on the strength of the strongest consumer spending in three years.
The GDP numbers “were enough above expectations to conjure up ideas of additional petroleum demand improvement,” wrote Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, in a note to clients.
There has already been plenty of demand for heating oil this winter, thanks to frigid temperatures in the Northeast and other regions. Heating oil futures rose 4 cents to $3.22 a gallon, and have gained 28 cents, or 10 percent, since Jan. 14.
Supplies of distillate fuels, including heating oil, declined sharply last week, as the U.S. Northeast shivered through a cold spell. The Energy Department said Wednesday that distillate supplies dropped by 4.6 million barrels, twice what analysts had expected. The surge in demand dropped distillate supplies to around 22 percent below five-year averages.
Natural gas prices fell sharply, after having risen a day earlier to prices last seen four years ago. Forecasts for milder temperatures drove the decline. Futures fell 45 cents, or 8 percent, to $5.01 per 1,000 cubic feet.
On the roads, drivers in the U.S. paid an average of $3.28 per gallon. That’s down 1 cent from a week ago and 11 cents cheaper than this time last year, when prices were beginning a run-up that ended near $3.80 a gallon at the end of February.
Brent crude, used to set prices for international varieties of crude, rose 10 cents to $107.95 on the ICE Futures exchange in London.
Wholesale gasoline was flat at $2.66 a gallon.