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Oil prices rise above $104 after Federal Reserve boosts 2012 economic outlook
NEW YORK (AP) ' Oil prices rose Wednesday after the Federal Reserve boosted its outlook for U.S. economic growth.
Benchmark West Texas Intermediate crude added 57 cents to $104.12 per barrel in New York. Brent crude, which sets the price of oil imported into the U.S., added 85 cents to $119.01 per barrel in London.
The Fed expects the U.S. economy to grow between 2.4 percent and 2.9 percent in 2012. That's up from a January forecast of 2.2 percent to 2.7 percent growth. The Fed also expects unemployment to drop to between 7.8 percent and 8 percent by the end of the year. The rate is currently 8.2 percent.
Natural gas also rose sharply. It gained earlier after Encana, a large Canadian gas producer, said it would cut production. It rose further after the Fed came out with its forecast. Natural gas is up 9.5 cents to $2.07 per 1,000 cubic feet.
Oil dipped earlier in the day after the Energy Information Administration reported that U.S. oil supplies increased by 4 million barrels last week. The increase was a surprise following an industry trade group's prediction late Tuesday that supplies had declined last week. The price of oil tends to fall as more supply becomes available to refineries.
Crude supplies climbed close to a record high in Cushing, Okla., where benchmark crude is delivered. High oil supplies in Cushing have pushed the benchmark price lower than other oil varieties. Those supplies are expected to begin falling in May when the Seaway Pipeline begins carrying crude oil from Cushing to the Gulf Coast.
Supplies also rose last week on the East Coast, Gulf Coast, Midwest and Rocky Mountains.
Petroleum demand fell by 3.2 percent when compared with the same time last year.
At the pump, gasoline prices fell for a ninth day to an average $3.84 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. The price of gasoline has declined by an average of 9.6 cents per gallon since it hit $3.936 per gallon on April 6.
In other energy trading, heating oil rose by 3 cents to $3.16 per gallon and gasoline futures gave up a penny to $3.15 per gallon.
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