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Crude oil prices add US$2 on technical buying, US growth

Oil prices closed above US$77 a barrel, near an all-time high on Friday on technical buying and news of faster-than-expected economic growth.

The US Commerce Department said on Friday the US economy as measured by GDP expanded at an annual rate of 3.4 percent in the second quarter, removing some of the concerns about economic growth that sent oil prices down on Thursday in sympathy with Wall Street's plunge.

But some analysts discounted the economic growth numbers as a factor in Friday's rally, saying that the government data was released hours before prices took off.

Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois, said technical buying by large investment funds -- or predetermined decisions to buy when prices reach certain levels -- fueled Friday's price surge.

"We've got a highly charged market here, and it doesn't take much of a headline to spark a 5 percent price move," he said.

Light, sweet crude for September delivery rose US$2.07 to settle at US$77.02 a barrel on the New York Mercantile Exchange. The highest ever settlement price for a front-month contract was US$77.03 a barrel, set on July 14 last year. Reflecting how volatile trading in oil futures has been, oil ended the week up only US$1.45 a barrel, or 1.9 percent, despite rising more than US$2 a barrel on two separate days.

Concerns about lower economic growth drove Thursday's sell-off on Wall Street, analysts said. Oil prices fell US$0.93 on Thursday in sympathy with the stock market, they said.

Oil's rally pulled the rest of the energy complex higher on Friday. August gasoline rose US$0.0258 to settle at US$2.1017 a gallon (3.7854 liter) after falling earlier. Gasoline futures end the week 6.26 cents, or 2.9 percent, lower.

Meanwhile, the average US price of a gallon of gas fell US$0.015 overnight to US$2.92 (US$0.77 a liter), according to AAA and the Oil Price Information Service.

Retail prices, which typically lag the futures market, are at their lowest point since peaking at US$3.227 a gallon (US$0.85 a liter) in late May.
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