Oil above $80 on positive news for Europe banks

October 6, 2011 - 12:35 PM

NEW YORK (AP) — Oil rose Thursday as Europe's central bank tried to strengthen the region's financial system.

Benchmark crude rose 79 cents to $80.47 per barrel in New York, while Brent crude rose 21 cents to $102.94 in London.

Oil climbed for a second day after plummeting to 12-month lows earlier in the week. The fall came as credit problems in the eurozone rattled energy markets. Investors fear that a Greek default could spark a wider banking crisis that threatens the U.S. economy and weakens demand for oil.

In an effort to deal with that the European Central Bank on Thursday offered new emergency loans to banks that could shield them from possible losses.

Europe's financial problems have scared many investors out of oil markets this year, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. When Europe's situation appears to improve, investors rush back in, lifting prices, Kloza said.

A stronger Europe and world economy means demand for oil will rise.

The U.S. economy also showed signs of strength, as major retailers posted strong sales increases in September.

Meanwhile retail gasoline prices fell by less than a penny to a national average of $3.392 for a gallon of regular, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has dropped almost every day in the last four weeks. It's down more than 7 percent, but it's still 64 cents higher than at the same time last year.

In other energy commodities trading, heating oil added 2.04 cents to $2.797 per gallon and gasoline futures rose 4.43 cents to $2.6135 per gallon. Natural gas lost 2.9 cents at $3.541 per 1,000 cubic feet.