The price of oil rose 1% Thursday as stockpiles declined and amid new indications that demand is rising in the U.S., the world's largest crude consumer.
The price of natural gas soared more than 4% to $4.44 per thousand cubic feet -- the highest price since July of 2011 -- after the government reported a huge draw in supplies, the result of cold temperatures across the U.S. in recent weeks.
The Energy Department said Thursday that natural gas supplies dropped by 285 billion cubic feet last week and are 261 billion cubic feet below the five-year average.
Benchmark U.S. crude for January delivery rose $0.83 to $98.63 a barrel in midday trading. Brent crude for February delivery, a benchmark used to price international crudes used by many U.S. refiners, rose $0.76 to $110.39.
The average retail price for a gallon of gasoline fell less than a penny to $3.21 per gallon, according to AAA, OPIS and Wright Express. Gasoline has fallen $0.04 in the past week, and it is $0.03 less than it was a year ago.
Oil prices rose despite a decision Wednesday by the U.S. Federal Reserve to reduce its stimulus spending, which analysts believe will eventually lead to lower oil prices. A reduction in stimulus spending increases the value of the dollar compared with other currencies. That makes commodities such as oil, which are priced in dollars, more expensive and less attractive.
"A stronger U.S. dollar will play against commodities and will add to price pressure from the well-supplied oil picture for 2014," said Olivier Jakob of Petromatrix in Switzerland, noting that some investors had put money into oil futures exclusively because of the Fed's stimulus measures. "On the basis of investment flows and of the U.S. dollar, we therefore take the tapering as a negative input for oil prices in 2014."
But the Fed reduced stimulus because the U.S. economy is improving, and that may increase demand from investors. The American Petroleum Institute, an industry group, said oil deliveries, a measure of demand, rose 4.9% in November.
The U.S. Energy Department said Wednesday crude oil supplies fell by 2.9 million barrels last week.
In other energy futures trading:
- Wholesale gasoline rose $0.03 to $2.728 a gallon.
- Heating oil rose 1.5 cents to $3.022 a gallon.