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Oil jumps above $97 as US home prices rise and stocks chase records

NEW YORK, N.Y. – The price of oil climbed above US$97 a barrel as home prices in the U.S. accelerated and stock markets resumed their rise toward record levels.

Benchmark West Texas Intermediate crude for March delivery rose US$1, or 1 per cent, to US$97.44 a barrel around midday on the New York Mercantile Exchange. Oil hasn’t closed above US$97 in New York since Sept. 14.

Oil is now up more than US$5 a barrel this year.

Signs of improvement in the global economy are driving the increase in oil prices.

A report Tuesday showed U.S. home prices in November had the biggest year-over-year increase in six years. That added to evidence showing that the housing market is recovering and outweighed a separate report indicating that higher taxes and an uncertain economic picture are sapping consumers’ confidence.

Those were the latest reports in a big week for U.S. economic indicators. The government will also this week release the latest numbers on weekly jobless claims, January unemployment and fourth-quarter growth. And the Federal Reserve’s policy committee is holding a two-day meeting that concludes on Wednesday.

U.S. stocks are approaching record levels after a January rally that has pushed the Dow Jones industrial average 6.2 per cent higher this month. And the Standard & Poor’s 500 index is up 5.3 per cent, its highest level since December 2007.

Brent crude, used to price international varieties of oil, rose 57 cents to US$114.05 a barrel on the ICE Futures exchange in London.

In other energy futures trading on Nymex:

— Wholesale gasoline rose 2 cents to US$2.96 per gallon (3.79 litres).

— Natural gas lost 6 cents to US$3.25 per 1,000 cubic feet.

— Heating oil gained 3 cents to US$3.09 a gallon.