Oil prices rise as ECB head vows to save euro

Oil prices rise as ECB head pledges to do what's necessary to protect euro

Associated Press

The price of oil rose after the head of the European Central Bank vowed to protect the currency used by 17 countries in the financially strapped region.

Europe's worsening debt crisis has raised speculation that the central bank will act to promote economic growth. A stronger economy would boost demand for oil and other energy products.

Demand for oil in Europe has dropped as some countries have fallen into recession. Earlier this month, the International Energy Agency estimated oil demand in Europe this year at 14.6 million barrels a day, down from 15 million last year. The European Union accounts for about 16 percent of global oil use.

At an investment conference in London, ECB President Mario Draghi pledged Thursday to do "whatever it takes to preserve the euro." He also suggested that the bank could act to lower escalating borrowing rates for financially troubled countries like Spain and Italy.

Benchmark oil rose 39 cents to $89.36 per barrel in New York after earlier topping $90 per barrel. Brent crude, which is used to price international varieties of crude, gained 46 cents to $104.84 per barrel in London after earlier hitting $106.18 per barrel.

U.S. stocks and gold also surged.

Concerns have intensified that Spain may need a financial bailout package, similar to those given to Greece, Ireland and Portugal because its borrowing rates are high. That would strain Europe's finances because Spain's economy is the fourth largest among the countries that use the euro.

Draghi's comments marked a reversal from his position over the past few months. He had been insisting that it was up to the governments to restore confidence in the euro.

Price Futures Group Phil Flynn speculated that oil prices couldn't hold the earlier gains because of a lack of specifics in Draghi's remarks. "Once again...the market is moving on what we think we know but we really don't know," Flynn said. "What does he mean by that statement that we'll do 'everything it takes?'"

In other trading, natural gas prices were flat at $3.05 per 1,000 cubic feet after the government said the nation's supply expanded last week. Natural gas inventories were 15.8 percent more than the five-year average as of July 20.

Heating oil rose 2 cents to $2.87 per gallon and gasoline futures gained 3 cents to $2.74 per gallon.

At the pump, the national average for gasoline rose less than a penny overnight to $3.49 per gallon, according to AAA, Wright Express and the Oil Price Information Service. That's about 5 cents more than a week ago but still 20 cents lower than last year at this time.

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