NEW YORK (CNNMoney.com) -- Oil prices spiked more than 3% Friday, as investors worried that storm in the Caribbean could intensify and enter into the Gulf of Mexico over the weekend and ultimately disturb oil production.
What prices are doing: Crude oil futures for August delivery rose $2.35, or 3.1%, to $78.86 a barrel.
The national average price for a gallon of regular unleaded gas increased to $2.755, up 0.2 cent from the previous day's $2.753, according AAA.
What's moving the market: The National Hurricane Center said a tropical storm developing in the Caribbean has an 80% chance of forming into a tropical cyclone in the next 48 hours. Investors are concerned that the heavy storm could move into the Gulf of Mexico and interrupt crude production.
Earlier Friday, oil prices were lower and poised for their first weekly declined in three weeks. Renewed concerns on the strength of the economic recovery have pressured prices this week, and investors remained wary.
Worse-than-expected economic news on the housing market and a more cautious sentiment from the Federal Reserve pulled oil prices 1% lower before Friday's turnaround. Investors were also discouraged earlier this week by a surprise build in crude inventories.
What analysts are saying: "The approaching storm in the Gulf is providing the support for oil prices, but I don't think these gains will be sustainable next week," said Mike Fitzpatrick, vice president of energy at MF Global.
Fitzpatrick said fundamentals haven't changed and lackluster economic data will continue to dominate and pressure energy markets.
Myrto Sokou, analyst at Sucden Financial, said investors will be looking for signs of global economic conditions at the G-20 meeting in Toronto this weekend.
"There are quite bearish signs in the global economy that could push crude oil prices lower back to the $70 area, including the recent disappointing economic figures from euro zone and the United States, the big draw down in global equity markets, and high levels of oil inventories worldwide," she said in a research note.
|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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