Oil jumps as House OK's stimulus
Largest single-day bounce of the year for crude as Congress votes to approve a $789 billion bill to revitalize U.S. economy.
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NEW YORK (CNNMoney.com) -- Oil prices jumped Friday by the largest amount in a single-day since the end of 2008 as a $787 billion stimulus bill designed to jump-start the economy moved one step closer to full congressional approval.
U.S. crude for March delivery ended the trading day up $3.53 to $37.51 a barrel in New York. The largest previous single-session increase came on Dec. 31, 2008, when prices rose by $5.57 a barrel.
The final version of the hotly debated bill was approved by House of Representatives by a vote of 246 to 183 Friday.
The bill is expected to be approved by the Senate as well, and given to President Obama to sign by Monday, Presidents Day.
"To some extent that may be contributing to some willingness to take on more risk," said Rachel Ziemba, energy analyst with research firm RGE Monitor.
Concern about the U.S. economy and its corresponding demand for petroleum-based fuels has helped send crude prices plummeting from a record high of $147.27 a barrel last summer.
The Obama administration's economic team says the stimulus plan will create or save 3 million to 4 million jobs.
However, some say the package doesn't go far enough to address the economy's underlying problems.
"The main response to the stimulus has been one of being underwhelmed," said Ziemba. But investors may be playing off the fact that it is imminent, and that the negotiations have been completed, she added.
Price gap: Investors were also evening out the gap between oil sold in New York and and oil sold in London.
The price of Brent crude in London ended trading yesterday at $46.03 a barrel, while oil trading in New York closed at $33.98, a difference of more than $12 a barrel.
The price gap, along with the fact that U.S. crude hit a 7-week low yesterday, has prompted a lot of investors to sell Brent crude and buy U.S. crude, according to Tom Orr, head of research for trading firm Weeden & Co.
By afternoon eastern time, Brent crude had fallen $2.40 a barrel.
Still, "the fundamentals of crude are not very good," said Orr.
Demand: Concerns about falling demand persisted after the Organization of Petroleum Exporting Countries sharply cut its global demand forecast for this year.
The group said Friday it expected global demand for crude to tumble by 580,000 barrels per day this year - a much greater decline than the 180,000 barrels per day predicted in its previous forecast.
Earlier this week, the IEA also said it expected demand to fall by a whopping 980,000 barrels per day this year.
"We're seeing some of the biggest demand drops due to the global economy," said Phil Flynn, senior analyst with Alaron Trading in Chicago.
The predictions are "just another reminder that we're not quite through this crisis yet," he added.
Gasoline: Meanwhile the price of unleaded gas at the pump rose to a national average of $1.961 a gallon from $1.952 on Thursday, according to a daily survey of gas station credit card swipes from motorist group AAA. 
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