Oil rises slightly after sharp drop-off

NEW YORK (AP) ? The price of oil rose Friday following a two-day drop that pushed crude to its lowest level since October.

Benchmark U.S. crude increased $1.32 to $79.52 a barrel, though it's down more than 5 percent for the week. Brent crude, which is used to price oil imported by many U.S. refineries, climbed $1.52 to $90.76 a barrel.

Prices rose Friday after leaders of Germany, France, Italy and Spain said they would push for a $163 billion growth package. Any revival of Europe's flagging economy could boost energy demand in the region and increase oil consumption.

Meanwhile, a storm in the Gulf of Mexico is helping push oil prices higher. A system along the Yucatan Peninsula and Western Cuba could strengthen into a tropical cyclone within two days, according to the National Hurricane Center. Tropical storms and hurricanes can disrupt production of oil in the Gulf.

"Even if the storm doesn't do any major damage, it could still slow down imports," coming in on ships, said Phil Flynn, an analyst with Price Group.

Oil prices tumbled earlier this week on signs of a weakening economy. If businesses and people use less energy, demand for oil falls. Rising supplies are also weighing on prices. U.S. supplies are at their highest level in 22 years, thanks to a production boom in North America.

U.S. gasoline prices fell 2 cents to $3.45 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. The cost of regular unleaded has dropped 48 cents since peaking this year in April.

Drivers this week paid about 14 cents less for a gallon of gasoline than they did the same week last year. The drop in price, combined with falling consumption this year, means drivers are spending roughly $124 million less per day for gas.

In other futures trading, heating oil added a penny to $2.535 per gallon while wholesale gasoline added 1.7 cents to $2.567 per gallon. Natural gas rose by 6.1 cents to $2.643 per 1,000 cubic feet.

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Follow Chris Kahn on Twitter at http://twitter.com/ChrisKahnAP

Associated Press

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