Oil rises above $85, extending 2-month rally ahead of holiday weekend

Oil rises above $85, testing upper limit of range

NEW YORK — Oil prices rose above $85 a barrel Thursday, boosted by encouraging economic news and rising stock markets ahead of the Good Friday holiday.

Benchmark crude for May delivery rose $1.14 to $84.90 a barrel on the New York Mercantile Exchange. Earlier, crude reached $85.22, the highest level since January. Crude prices have been locked in a range of $70 to $85 for most of the last six months.

A government report showed initial jobless claims dropped last week, and the Institute for Supply Management said its manufacturing index rose in March. Both indicators cheered investors on the last day of commodities and stock trading before the Easter weekend. The Dow Jones Industrial Average was up about 75 points by early afternoon.

“A good portion of the buying (of oil) seems to have come on ‘good vibrations,’ the vague sense that the economic recovery is gaining momentum, and that that should lead to heavier demand for oil products,” consultancy Cameron Hanover said in a report.

In other Nymex trading in May contracts, heating oil rose 3.24 cents to $2.2114 a gallon, and gasoline gained 1.55 cents at $2.3227 a gallon. Natural gas advanced 2.57 cents to $4.126 per 1,000 cubic feet.

In London, Brent crude was up $1.35 at $84.05 on the ICE futures exchange.

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