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Summary Oil prices rose above $97 per barrel, but then gave up most of their gains in late trading.
The initial run-up in prices was driven by word that the European Central Bank will buy lots of government bonds, which should help lower borrowing costs for European countries struggling with debt expenses. Prices were also boosted by reports showing more private-sector hiring and fewer unemployment claims in the U.S.Positive economic news tends to boost oil prices, because traders anticipate that stronger economies will need more oil.Oil prices were also supported by a report from the Energy Information Administration that showed U.S. crude supplies dropped by more than analysts expected last week. Hurricane Isaac interrupted deliveries of oil imports and refinery activity along the Gulf Coast.Benchmark U.S. crude reached as high as $97.71 per barrel on the New York Mercantile Exchange. However, in late trading, enthusiasm cooled. Oil ended the day at $95.53, up just 17 cents. The price of Brent crude, priced in London, fell 51 cents to end at $112.98 a barrel.Why the big price decline from intraday highs? The answer wasnt obvious, even to some analysts.I wonder if its a case of buy on the rumor and sell on the news, said Michael Lynch, president of Strategic Energy & Economic Research.
