Oil prices rose 2% on Friday after a closely watched speech by the Federal Reserve chairman that left the door open to additional stimulus, but stopped short of announcing a specific plan.
Oil futures for October on the New York Mercantile Exchange settled at $96.47 a barrel, up $1.85, or 2%. Brent oil futures for October settled at $114.57 a barrel, up $1.92, or 1.7%.
Market participants said Federal Reserve Chairman Ben Bernanke's speech contained enough signals that the Fed would act to push crude and other commodities higher.
"It's just a big all-around commodities-up day," said Fred Rigolini, vice president at Paramount Options. "Any time there's talk of stimulus, it's bullish for oil."
The price increase also came after U.S. factory orders beat analyst expectations.
In the speech, which was delivered at the Fed's annual Jackson Hole, Wyo., conference, Mr. Bernanke made clear his deep dissatisfaction with the high level of unemployment, calling current conditions "far from satisfactory." Mr. Bernanke also emphasized the positives and downplayed the costs of undertaking the bond-buying purchases known as quantitative easing.
Two rounds of bond buying have raised overall economic output by 3%, Mr. Bernanke said, and increased payroll employment by two million jobs, he said his staff has estimated.
"A balanced reading of the evidence supports the conclusion that central bank securities purchases have provided meaningful support to the economic recovery while mitigating deflationary risks," he said.
Although Mr. Bernanke stopped short of greenlighting a new round of quantitative easing, traders said his remarks were positive enough to bolster the market's confidence that such a step was likely.
Quantitative easing can boost oil prices by spurring economic growth. Quantitative easing can also boost oil, which is traded in dollars, by weakening the dollar. The U.S. dollar was lower Friday relative to the euro.
Mr. Bernanke "didn't come out with enough to get [oil] higher, but he didn't disappoint either," said John Kilduff, a trader at Again Capital.
Oil prices initially gave back some of their gains right after Mr. Bernanke's speech. But as the market digested the remarks, crude began to rally more, getting as high as $96.92 at one point before retreating.
"While initially it looked like the market was a little disappointed, it doesn't look that way now," said Gene McGillian, an analyst at Tradition Energy.
Besides the Bernanke speech, analysts pointed to a surprisingly robust report on U.S. factory orders.
Orders for manufactured goods rose 2.8% to $478.62 billion in July, the Commerce Department said Friday, the biggest jump in a year.
The gain was the highest since July 2011 and above expectations. Economists surveyed by Dow Jones Newswires had forecast a 2.3% rise in factory goods.
The Thomson Reuters/University of Michigan consumer sentiment index also outperformed expectations. The indicator rose to 74.3 at the end of August versus a reading of 73.6 early in August and above a final-July level of 72.3, according to an economist who has seen the report.
Economists surveyed by Dow Jones Newswires had expected the end-August index to edge down to 73.5.
Along with crude oil, prices for refined products also moved higher Friday.
The September contract for reformulated gasoline blendstock, or RBOB, which expired Friday, settled at $3.106 a gallon, up 2.3 cents. The October RBOB contract settled at $2.973 a gallon, up 6.48 cents. The September contract for heating oil, which also expired Friday, settled at $3.170 a gallon, up 4.5 cents. The October contract for heating oil settled at $3.180 a gallon, up 4.5 cents.
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