NEW YORK (AP) - The price of oil jumped 1.7 percent Friday after Federal Reserve Chairman Ben Bernanke made clear in a speech that the central bank will do more to revive the U.S. economy.
U.S benchmark crude rose $1.59 to $96.21 per barrel in morning trading Friday. Brent Crude, which is used to price oil used by many U.S. refiners, rose $1.49 to $114.14.
In a speech at an annual Fed conference in Jackson Hole, Wyoming, Bernanke said the economic recovery is "far from satisfactory" but he did not give any timetable for action that might reduce borrowing costs and help stimulate growth.
If the Fed reduces the cost of borrowing, it could boost demand for the energy needed to fuel growth and make oil and other commodities more attractive investments.
"With interest rates near zero, people look for somewhere to put their money. One of those places is the oil market," said energy analyst and consultant Jim Ritterbusch.
Oil prices have wavered between $94 and $97 per barrel over the past two weeks, and Ritterbusch expects them to stay roughly within that range well into September. World oil demand is rising only slightly, and supplies are adequate. But continued worries over tensions between Iran and the West will keep prices from dropping. Expectations of financial stimulus programs from U.S. and European central banks will also keep the market propped up.
Hurricane Isaac did not have a major effect on crude prices this week, even though almost all of the oil production in the U.S. Gulf of Mexico was halted ahead of the storm. Production is expected to return to normal over the next several days.
U.S. retail gasoline prices surged over the past week after the storm forced several Gulf Coast refineries to shut down or operate at lower rates. But the dramatic price spike appears to be over and pump prices are expected to start falling after Labor Day, the last big driving weekend of the summer.
The average retail gasoline price rose less than a penny to $3.83 per gallon Friday according to the Oil Price Information Service, AAA, and Wright Express.
Tom Kloza said he expects average retail prices to creep slightly higher by Saturday. "But we're in the ninth inning of this," he said.
In other Nymex energy futures trading, heating oil advanced 2 cents to $3.16 a gallon, while wholesale gasoline added 4 cents to $2.94 a gallon. Natural gas rose 3 cents $2.78 per 1,000 cubic feet.
Tennessee Senator Bob Corker released a statement regarding Bernanke's speech:
schizophrenic gyrations that occurred in the markets today before,
during, and after Chairman Bernanke's speech highlight just how far away
from fundamentals our unhealthy obsession
with the Fed has taken us, and today's speech highlights the desperate
need for policy makers to meaningfully address the underlying problems
in our economy. To that end, we need to enact true fiscal reform,
embracing pro-growth tax policies and giving the
world certainty that we can address the challenge of our structural
deficits and debt by reforming entitlements. These policies from
Congress, not more short-term stimulus from the Fed, are the ingredients
necessary for restoring growth in the American economy," Corker said.
(Copyright 2012 by The Associated Press. All Rights Reserved.)