Oil prices end the week above $85 as sales of new and existing homes climb

Oil settles above $85 after home sales surge

NEW YORK — Oil prices rose above $85 on Friday helped by strong sales of new homes that surged last month from a record low in February.

Meanwhile, efforts to resolve Greece’s debt crisis and its impact on economic recovery and energy demand kept traders on edge.

Benchmark crude for June delivery rose $1.42 to settle at $85.12 a barrel on the New York Mercantile Exchange.

Greece’s problems deepened Thursday when Europe’s statistics agency found the country’s budget deficit last year was larger than previously thought, raising its borrowing costs. Moody’s Investor Services downgraded Greece’s debt and said more downgrades could be coming.

Greece requested a joint eurozone-International Monetary Fund financial rescue as market pressure pushed the debt-ridden country’s borrowing costs to unsustainable levels.

The Commerce Department said that new home sales rose 27 percent in March, rebounding from the previous month’s record low and blowing past expectations as better weather and government incentives boosted sales.

More good housing news came later in the day when the National Association of Realtors said sales of existing homes also rose last month.

The news gave stocks and energy prices a lift, with the Dow Jones Industrial Average ending the day 70 points higher at 11204.28.

But there are still few signs that energy demand is picking up, said MF Global analyst Mike Fitzpatrick.

“Acceptance of the idea that a strong sustainable recovery is under way is the foundation of the market’s strength, and this is the most tenuous of elements,” he said.

With the economy weighed down by unemployment, Fitzpatrick does not see a near-term consumer-driven recovery. While gasoline prices have been climbing since February as oil rose and refiners geared up for more expensive summer blends, the climb is not as rapid as in years past.

This week retail gasoline prices drifted lower. Pump prices on Friday fell to a new national average of $2.851 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 3.5 cents higher than a month ago and 78.8 cents above a year ago. Many analysts and government forecasters still think gasoline will average $3 or more across the country by summer.

In other Nymex trading in May contracts, heating oil rose 3.55 cents to settle at $2.2505 a gallon, and gasoline gained 5.29 cents to close at $2.3531 a gallon. Natural gas rose 12.9 cents to settle at $4.257 per 1,000 cubic feet.

In London, Brent crude advanced $1.58 to settle at $87.25 on the ICE Futures exchange.

Associated Press writers Pablo Gorondi in Budapest, Hungary and Eileen Ng in Kuala Lumpur, Malaysia, and Elena Becatoros in Athens contributed to this report.