Oil rose Wednesday on renewed optimism about the U.S. economy, as traders took their cue from higher stock prices.
Benchmark West Texas Intermediate crude for September delivery rose $1.25 to $87.89 per barrel in midday trading on the New York Mercantile Exchange.
Brent crude, which is used to price many international oil varieties, increased by $1.74 to $110.87 per barrel on the ICE Futures exchange in London.
Rising stock markets and a weaker dollar pushed up oil. Stocks were higher on a series of better-than-expected quarterly earnings reports from companies such as Target, John Deere and Staples. The dollar fell versus other major currencies. Oil, which is priced in U.S. currency, tends to rise as a falling greenback makes crude cheaper for investors holding foreign money.
Oil rose despite an unexpected jump in oil supplies last week. The Energy Information Administration said that supplies increased by 4.2 million barrels, while oil and gasoline demand dropped.
Independent oil analyst Jim Ritterbusch said investors are mostly looking for a better read on where the economy is headed, and most have shrugged off government supply data from last week. The rally on Wall Street has boosted expectations that the economy — and energy demand — will grow stronger in coming months.
“They’re not finding much of a reason to sell right now,” Ritterbusch said.
In other Nymex trading for September contracts, heating oil rose 4 cents to $2.9765 per gallon and gasoline futures increased by 4 cents to $2.8937 per gallon. Natural gas rose 2 cents to $3.948 per 1,000 cubic feet.