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Oil jumps more than 2 percent, natural gas drops

The Associated Press

NEW YORK (AP) -- The price of oil rose more than 2 percent Thursday as the European Central Bank cut its key interest rate to a new low and U.S. unemployment claims dropped.

But natural gas was headed for its biggest decline since August after U.S. supplies rose much more than expected.

Benchmark oil for June delivery was up $2.22, or 2.4 percent, to $93.25 a barrel at midday on the New York Mercantile Exchange. Oil fell $2.43 a barrel Wednesday.

The European Central Bank cut its benchmark interest rate to 0.5 percent from 0.75 percent at its meeting in Bratislava, Slovakia. The effects of the rate cut remain to be seen, but traders viewed it as an encouraging step, supporting the economy and possibly leading to increased oil demand.

In the U.S., the Labor Department reported that applications for unemployment benefits fell last week to the lowest since January 2008. That suggests layoffs are easing.

Natural gas futures were down 26 cents, or 6 percent, to $4.07 per 1,000 cubic feet. The Energy Department reported that natural gas in storage grew by 43 billion cubic feet to 1.777 trillion cubic feet for the week ended April 26. Analysts expected a more modest increase of 28 billion to 32 billion cubic feet.

Before Thursday, natural gas prices had risen 29 percent this year as homeowners kept the heat on when cold weather hung around past the end of winter and supplies fell.

Brent crude, which is used to set prices of oil from the North Sea used by many U.S. refiners, rose $1.81 to $101.76 per barrel on the ICE Futures exchange in London.

In other energy futures trading on the New York Mercantile Exchange:

— Wholesale gasoline gained 4 cents to $2.76 a gallon.

— Heating oil added 5 cents to $2.84 a gallon.


Pamela Sampson in Bangkok and Pablo Gorondi in Budapest contributed to this report.