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Oil jumps more than 3 percent, natural gas drops

Friday - 5/3/2013, 12:20am  ET

The Associated Press

NEW YORK (AP) -- The price of oil rose more than 3 percent Thursday as the European Central Bank cut its key interest rate to a new low and U.S. unemployment claims dropped.

But natural gas was headed for its biggest decline since August after U.S. supplies rose much more than expected.

Benchmark oil for June delivery rose $2.96, or 3.3 percent, to finish at $93.99 a barrel on the New York Mercantile Exchange. That's the biggest one-day gain for crude since November.

The European Central Bank cut its benchmark interest rate to 0.5 percent from 0.75 percent at its meeting in Bratislava, Slovakia. The effects of the rate cut remain to be seen, but traders viewed it as an encouraging step, supporting the economy and possibly leading to increased oil demand.

In the U.S., the Labor Department reported that applications for unemployment benefits fell last week to the lowest since January 2008. That suggests layoffs are easing.

Natural gas futures dropped by 30 cents, or 7 percent, to end at $4.03 per 1,000 cubic feet, its biggest one-day slide since August. The Energy Department reported that natural gas in storage grew by 43 billion cubic feet to 1.777 trillion cubic feet last week. Analysts expected a more modest increase of 28 billion to 32 billion cubic feet.

Before Thursday, natural gas prices had risen 29 percent this year as homeowners kept the heat on when cold weather hung around past the end of winter and supplies fell.

Prices continued to edge up at the gas pump. The national average for a gallon of regular was $3.53 on Thursday, up a penny from Wednesday. It's about 28 cents lower than a year ago.

Brent crude, which is used to set prices of oil from the North Sea used by many U.S. refiners, rose $2.90, or 2.9 percent, to finish at $102.85 per barrel on the ICE Futures exchange in London.

In other energy futures trading on the New York Mercantile Exchange:

-- Wholesale gasoline gained 6 cents to end at $2.78 a gallon.

-- Heating oil added 7 cents to finish at $2.86 a gallon.

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Pamela Sampson in Bangkok and Pablo Gorondi in Budapest contributed to this report.


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