NEW YORK -- The price of oil is flirting with $100 per barrel for the first time since the summer, as fears fade that Europe's debt crisis will spread and trigger another recession.
On Friday benchmark crude rose $1.21 to end the day at $98.99 per barrel in New York. Prices climbed as high as $99.20 earlier in the day. Brent crude, which is used to price many foreign oil varieties, increased 45 cents to finish at $114.16 in London.
Higher oil prices will lead to more expensive gasoline, since gas is refined from crude. The national average of $3.44 per gallon is already the highest ever for this time of year, and analysts say pump prices are likely to hit $4 a gallon by spring.
Oil prices have climbed from about $77 a barrel at the beginning of October as two of the market's biggest fears -- an unraveling of the 17-nation eurozone and another recession in the U.S. -- gradually eased. That has reassured investors that demand for oil will likely stay strong.
Greece and Italy now have new political leadership to help them deal with their massive debts.
Greece appointed former European Central Bank Vice President Lucas Papademos as its new prime minister, and an interim cabinet was sworn in Friday. And Italy approved crucial economic reforms that were demanded by the European Union. Italy also will get a new prime minister.
Stock markets rose Friday as well, with the major indexes up about 2 percent.
A rise in oil prices to $100 per barrel is a key milestone, indicating that the economy can afford to pay those prices.
"It's a sign of confidence that we're not going to flip back into recession," PFGBest analyst Phil Flynn said. "It's also sending a message that we better conserve supplies or find new sources of oil."
Oil, gasoline and diesel supplies have been falling this year, and continued declines could push oil prices higher. The government said this week that crude supplies are 7.3 percent below their five-year average, while gasoline supplies are 2.9 percent lower and diesel supplies are down 7.5 percent.
Supplies have dropped as diesel consumption rises in the U.S. Refineries also have been exporting more gasoline and diesel this year.