NEW YORK (AP) - Oil futures extended their upward march Thursday after new trade deficit figures fed optimism that the economy may dodge a serious downturn.
The Commerce Department said the trade deficit fell in December and for 2007 as a whole -- an indication the U.S. is exporting more goods. That had investors theorizing that demand for energy in the U.S. won't be as weak as feared.
Meanwhile, the Labor Department said jobless claims fell more than expected last week.
And on Capitol Hill, Federal Reserve Chairman Ben Bernanke said the central bank is ready to lower interest rates again in response to deteriorating economic conditions. Interest rate cuts support oil prices because they tend to weaken the dollar. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.
Light, sweet crude for March delivery rose $1.90 to $95.17 a barrel on the New York Mercantile Exchange, a one-month high. The contract has risen in 4 of the past 5 sessions, adding more than $6 in a little over a week.
Energy investors were also buying after a federal judge's decision Wednesday to confirm an earlier ruling freezing $300 million in a bank account owned by the Venezuelan state oil company. Exxon Mobil is challenging Venezuela's nationalization of an oil project. A British court's earlier decision to temporarily freeze up to $12 billion in Venezuelan oil assets drew threats from President Hugo Chavez to cut off all oil sales to the U.S.
'Traders still focus on worries about the Exxon Mobil v. Venezuela contest as well as hopes that the U.S. may sidestep a possible economic recession,' said Tim Evans, an analyst at Citigroup Inc., in a research note.
Word that the U.S. has given international nuclear regulators evidence that diplomats say shows Iran is actively trying to build a nuclear bomb gave investors another reason to buy.
However, many analysts questioned oil's recent price strength, arguing that underlying supply and demand fundamentals suggest prices should be falling.
'I actually cannot justify this rally,' said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill Cos., echoing the sentiments of many.
Indeed, forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, call for slower demand growth this year due to the weakening economy.
Analysts suggested some investors may be buying for technical reasons, including the fact that oil prices have declined no lower than about $86 a barrel since hitting a record above $100 early last month.
At the pump, meanwhile, gas prices rose 0.7 cent overnight to a national average of $2.979 a gallon, according to AAA and the Oil Price Information Service. Retail prices, which typically lag the futures market, have inched higher in recent days in response to oil's move higher.
Other energy futures also rose Thursday. March heating oil futures added 4.17 cents to $2.6573 a gallon on the Nymex while March gasoline futures rose 5.09 cents to $2.4408 a gallon.
March natural gas futures rose 28.1 cents to $8.669 per 1,000 cubic feet on the Nymex after the Energy Department said inventories fell by 120 billion cubic feet last week, slightly more than analysts surveyed by Dow Jones Newswires had expected.
In London, March Brent crude rose $1.97 to $95.29 a barrel on the ICE Futures exchange.
Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.