NEW YORK (CNNMoney.com) -- Oil prices rose for the second straight day Thursday, after upbeat jobs data and the dollar weakened against the euro, boosting the attractiveness of crude.
What prices are doing: Crude oil for June delivery rose $1.95, or 2.3%, to settle at $85.17 a barrel.
Prices plummeted earlier in the week after Greek, Portuguese and Spanish sovereign debt were downgraded. Crude is up marginally in the past week, but up over 60% from this time last year.
What's moving the market: Prices climbed Thursday as optimism, fed by the Federal Reserve's rate decision and a dip in jobless claims, returned to the market. The dollar also weakened, boosting crude's appeal.
The Federal Reserve's decision on Wednesday to keep a key interest rate unchanged helped to push U.S. stocks higher in late-day trading.
Crude prices followed suit, jumping 1%, as traders bought crude on the hope that low interest rates would fuel investment and result in increased energy demand.
Crude soared after the government's weekly jobs report showed an 11,000 dip in initial unemployment claims last week. This number was in line with economist expectations and fueled trader hopes that jobs and demand will finally rebound.
Also, the dollar fell 0.2% against the euro to $1.3243 amid speculation that Greece's bailout would be increased and improved. A weaker dollar makes crude, which is priced in the U.S. currency, cheaper for foreign investors. That tends to bolster demand and prices.
What analysts are saying: "Today, it's pretty much a classic risk trade," said Brad Samples, a commodities analyst for Summit Energy. "Risk appetite is rising and people are returning to the market."
For weeks, crude prices have struggled to find a definitive direction as traders balanced optimistic economic and earnings news with developments in Europe's debt crisis. Bullish market news would usually bolster oil prices as traders speculate that higher demand will follow.
While crude prices were rising Thursday, many analysts say that a ramp-up is still unjustified, given week-to-week builds in oil inventories and some dim spots in the economy, such as housing. As a result, the analysts believe crude prices could trade within a relatively tight range for some time to come.
A worsening of Europe's debt situation could send oil prices lower. But for now, said Samples, crude prices are going the way of the stock market, up.
"The market is assuming and trading on the assumption that these countries will be treated like they are too big to fail," said Samples. "We think this is a dangerous assumption."
Looking ahead: The Commerce Department will report an advanced reading of first quarter GDP, a key indicator of economic growth, on Friday. Economists surveyed by Briefing.com forecast an annualized growth rate of 3.3%, down from 5.6% in the fourth quarter. The data could move the oil markets.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.80%||3.88%|
|15 yr fixed||3.20%||3.23%|
|30 yr refi||3.82%||3.93%|
|15 yr refi||3.20%||3.23%|
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