Crude Settles +4.2% At $93.96; New 3-Month High

Crude oil futures prices surged 4.2% Thursday to their highest level in nearly three months after a European deal on Greece's debt and data which showed the U.S. economy grew by its highest level in a year.

The plan agreed by European leaders to reduce Greece's sovereign debt also bolstered the euro zone's bailout fund to $1.4 trillion to stem the potential for debt crisis to spread across the continent. Strong gains in the euro against the dollar in response to the deal helped spur buying in oil, traders said. Weakness in the U.S. currency makes dollar-based oil cheaper for some investors using foreign currencies.

Along with what the market sees as a brighter outlook for the European economies, the Commerce Department said U.S. gross domestic product in the third quarter rose by 2.5%, largely in line with a 2.7% rise expected by analysts surveyed by Dow Jones Newswires.

The strong rise followed gains of 0.4% and 1.3% in the first and second quarter, respectively.

"The market really has gotten fresh legs from the GDP data" and the European pact, said Gene McGillian, a broker and analyst at Tradition Energy.

Light, sweet crude oil for December delivery on the New York Mercantile Exchange settled 4.2%, or $3.76 a barrel, higher, at $93.96 a barrel. That's the highest price since Aug. 1. ICE North Sea Brent crude was 2.9%, or $2.91 higher, at $112.08 a barrel, the highest level since Oct. 14.

Front-month Nymex crude ended with a 14-cent premium to the second month, in the fourth day of the market price structure known as backwardation. Traders said the front-month premium -- a reversal of the market structure for the past three years -- shows near-term strong demand for crude amid tight U.S. inventories. Crude inventories gained 4.7 million barrels last week as imports rebounded sharply, but still are down to near five-year averages, government data show.

Tradition's McGillian said he is skeptical that prices can climb much further, noting a move up to $95 a barrel would be a $20 swing from the low hit early this month. Still, additional signs of a revival in the U.S. economy could put prices on course for $100 a barrel, a level prices haven't settled above since June.

Traders noted that U.S. gasoline demand remains extremely weak, potentially capping further price rises. The Energy Information Administration said Wednesday that demand for gasoline, the most widely used petroleum product in the U.S. dropped to a 13-year low for this time of year and was 9.2% below a year ago. Demand for distillates (diesel/heating oil) rose to a four-year high for this time of year last week, the EIA said.

Heating oil for November delivery rose 2.7%, or 8.26 cents, to a three-month high of $3.0984 a gallon.

Reformulated gasoline blendstock futures rose 9.04 cents, or 3.4%, to $2.742 a gallon, an eight-day high.