Oil rises above $68 as 3-month rally resumes after brief sell-off

Oil rises above $68 as 3-month rally resumes

NEW YORK — Oil prices rebounded Thursday, buoyed by a weaker dollar, the first drop in unemployment numbers since January, and renewed expectations that crude will extend its rally this year.

Benchmark crude for July delivery was up $2.58 to $68.70 a barrel on the New York Mercantile Exchange. On Wednesday, the contract tumbled $2.43 to settle at $66.12.

In London, Brent prices rose $2.72 to $68.60 a barrel on the ICE Futures exchange.

Oil prices, which have rallied for three months, soared this week to their highest levels since November. Crude now fetches nearly twice its February price, mostly on the expectation that the dismal U.S. economy could be stabilizing.

The government said Thursday that the nation’s unemployment rolls fell for the first time in 20 weeks. The Labor Department said the number of people filing for jobless benefits dropped by 15,000 to 6.7 million.

However, experts say the market is filled with more enthusiasm than is warranted by the huge surplus of petroleum in the U.S.

On Thursday, the Energy Information Administration said the country’s supply of natural gas rose more than expected last week to 2.34 trillion cubic feet. Natural gas is a major energy source for power plants, and the bloated inventory is a sign of how much manufacturers and other industries have slowed down.

“It’s certainly hard to see anything in the fundamental numbers to support” higher crude prices, said Michael Lynch, president of Strategic Energy & Economic Research. “The psychology has shifted, and people seize on the bullish news and ignore the bearish news.”

On Wednesday a Commerce Department report showed a smaller-than-expected rise in factory orders. And the Institute for Supply Management, a trade group of purchasing executives, said the services sector shrank in May below economists’ estimates at the slowest pace since October.

The dollar also fell against the euro and the yen, a move that tends to push oil prices higher since the benchmark contract is traded in U.S. currency.

In other Nymex trading, gasoline for July delivery rose 4.34 cents to $1.945 a gallon and heating oil gained 5.26 cents to $1.791 a gallon. Natural gas for July delivery added 2.9 cents to $3.795 per 1,000 cubic feet.

Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.