Oil prices edge up; pump cost tops '09's

NEW YORK - Oil prices edged higher yesterday to end the week, even though supplies are plentiful and demand is slack as more Americans lost their jobs last month.

Energy prices have rallied for weeks on some signs that manufacturing activity had picked up in the United States and China, but again it was the falling dollar that inflated the price of crude oil yesterday.

Crude and gasoline futures are up 15 percent since mid-December, and prices at the pump this week are higher than at any point last year.

In the Philadelphia area, pump prices are up 6 to 7 cents a gallon over the last week. Yesterday's average price in Philadelphia and the four Pennsylvania suburban counties was $2.77 a gallon, up from $2.71 a week ago, AAA Mid-Atlantic said.

In the three South Jersey suburban counties, the average yesterday was $2.58 a gallon compared with $2.51 a week ago.

Gas prices are rising steadily even as the job picture grows worse, which leads Americans to drive less and, thus, use less gasoline.

The Labor Department reported yesterday 85,000 jobs were lost in December. Also yesterday, UPS Inc., the world's largest package-delivery company, said it would cut 1,800 management and administrative positions.

The government's jobs report sent the dollar sharply lower early in the day - and because crude is bought and sold in the U.S. currency, anyone holding euros could buy more oil.

Benchmark crude rose 9 cents to settle at $82.75 per barrel on the New York Mercantile Exchange.

Energy experts question how long prices can be sustained at the current level, given the jobs picture.

"The consumer-led recovery is still in jeopardy," energy-industry analyst Stephen Schork said.

Stockpiles of crude oil, gasoline, and distillate fuel oil are well above normal, according to the report by the U.S. Energy Information Administration.

Oil markets throughout 2009 appeared to respond more to the movement of the dollar rather than actual demand for energy and did so again yesterday.