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Oil prices rose above $97 per barrel on Thursday, but then gave up most of their gains in late trading.
The initial run-up in prices was driven by word that the European Central Bank will buy lots of government bonds, which should help lower borrowing costs for European countries struggling with debt expenses. Prices were also boosted by reports showing more private-sector hiring and fewer unemployment claims in the U.S.
Positive economic news tends to boost oil prices, because traders anticipate that stronger economies will need more oil.
Oil prices were also supported by a report from the Energy Information Administration that showed U.S. crude supplies dropped by more than analysts expected last week. Hurricane Isaac interrupted deliveries of oil imports and refinery activity along the Gulf Coast.
Benchmark U.S. crude reached as high as $97.71 per barrel on the New York Mercantile exchange. However, in late trading, enthusiasm cooled. Oil ended the day at $95.53, up just 17 cents. The price of Brent crude, priced in London rose 40 cents to end at $113.49.
Why the big price decline from intraday highs? The answer wasn't obvious, even to some analysts.
"I wonder if it's a case of buy on the rumor and sell on the news," said Michael Lynch, president of Strategic Energy & Economic Research.
Gasoline pump prices hovered around a national average $3.82 a gallon, according to AAA, Wright Express and oil Price Information Service.
â¿¿ Wholesale gasoline futures rose 4.12 cents to end at $2.9910 per gallon.
â¿¿ Heating oil rose 2.49 cents to finish at $3.1425 per gallon.
â¿¿ Natural gas fell 1.9 cents to end at $2.776 per 1,000 cubic feet.
The EIA report released Thursday showed that 28 billion square feet of natural gas went into storage last week. That was less than expected by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos. But stocks are still 13.1 percent higher than they were a year ago.