Oil prices surged nearly 9% Thursday as investors focused on a weaker dollar, rising stock markets and the hope that the U.S. economy has finally bottomed out.
Natural gas prices also rose even though a government report said U.S. inventories remain well above historical levels.
Price changes in both commodities directly affect the American economy. A jump in crude prices can influence everything from how much it costs to fill up at the gas pump to the cost of making golf balls, shampoo and thousands of other petroleum-based products.
Natural gas is used around the country to make electricity, so its price affects how much power companies want to charge rate payers.
On Thursday, benchmark crude for May delivery rose $4.25 to settle at $52.64 a barrel on the New York Mercantile Exchange. In London, Brent prices gained $4.31 to settle at $52.75 a barrel on the ICE Futures exchange.
Natural gas for May delivery added 8.7 cents to settle at $3.782 per 1,000 cubic feet.
"We're getting a bounce today, but I'm not sure if it will go much higher," said Peter Beutel, oil analyst at Cameron Hanover. "The market has a lot of reasonably negative factors going into it."
A massive surplus of crude has kept prices low this year, and government reports said that U.S. storage houses are only getting more bloated. They're now brimming with more oil than they've had in 16 years as manufacturers shutter factories and millions of laid off workers stay home.
On Thursday, the Labor Department said unemployment levels are the highest in more than 26 years. Initial claims for unemployment insurance unexpectedly rose to a seasonally adjusted 669,000 from the previous week's revised figure of 657,000.
The Energy Department's Energy Information Administration also reported Thursday that natural gas inventories held in underground storage in the lower 48 states stayed at 1.65 trillion cubic feet for the week ended March 27.
That's 32.1% above the inventory level from a year ago and 22.4% above the five-year average, according to the government data.
Despite swollen gas inventories and the grim jobless report, investors pumped more money into oil. Prices started climbing overnight and were already up about $2 a barrel as trading opened on the Nymex.
Besides the stock market, a weaker dollar helped boost crude prices. Oil is traded in U.S. currency and foreign investors can buy more when the dollar drops.
The 16-nation euro jumped to $1.3431, and the British pound rose to $1.4666 from $1.4447. But the dollar gained against the Japanese yen, rising to 99.33 from 98.65 yen.
Crude prices aren't moving because of supply or demand, but because of "the perceived imbalance in the U.S. and European economies," Alaron Trading analyst Phil Flynn said.
"Seems like the world now is running to the EU as a safe haven, and it makes the dollar much weaker, and commodities that are priced in dollars are moving much higher today," he said.
The Commerce Department also said orders for manufactured goods increased 1.8% in February. That's much higher than analysts expected and it reversed six straight monthly declines.
Still, investors continue to ignore batches of pessimistic reports about the economy, snapping up crude stocks even though global demand has failed to cut into a vast oil surplus, analyst Stephen Schork said.