NEW YORK (AP) — Oil prices edged up Friday, on signs that the U.S. economy may lift demand for energy.

Retail sales improved slightly in July and business inventories gained. But consumer sentiment fell to its lowest level in more than 30 years.

The reports left traders in the same spot they were in when the week began — guessing about future demand potential for everything from gasoline to heating oil.

Benchmark West Texas Intermediate crude rose 38 cents to US$86.10 a barrel in midday trading on the New York Mercantile Exchange. In London, Brent crude rose 1 cent to US$108.03 a barrel on the ICE Futures Exchange.

Oil prices have bounced from a low of US$79.30 to a little more than US$86 a barrel this week as investors remain concerned about global economic growth, ongoing financial problems in Europe and signs of a slower economy in China, a huge importer of oil and other commodities.

Traders recently have based their decisions buying and selling contracts largely on economic news and shifts in the stock markets. Good news means higher oil prices; discouraging economic news means prices have fallen.

“The economic uncertainty is so great that basically any good news is a boost to commodities markets as well as stocks,” said Michael Lynch, president of Strategic Energy & Economic Research. “People are just going to be watching the economic data and the stock market.”

The Commerce Department said consumers spent more on autos, furniture, clothing and gas in July, which sent retail sales up 0.5 per cent. It was the best showing since March. The agency also revised sales higher in the previous two months.

The monthly report is watched closely by investors because consumer spending accounts for about 70 per cent of economic growth.

The Commerce Department also said business inventories rose 0.3 per cent in June. Total business sales rose 0.4 per cent after a 0.1 per cent drop in May.

Overall economic growth slowed to just 0.8 per cent in the first six months of this year, the worst growth since the recession officially ended in June 2009.

Lynch said he thinks oil prices will range between US$85 per barrel and US$90 per barrel in the next week, although he emphasized it is difficult to speculate because of the ongoing volatility in the market.

Oil inventories may continue to decline, as they did last week, but Lynch isn’t expecting demand to strengthen soon.

In other Nymex trading, heating oil rose 1.25 cents to US$2.9117 a gallon, gasoline gained 0.46 cent to finish at US$2.8227 a gallon and natural gas futures dropped 2.7 cents to finish at US$4.081 per 1,000 cubic feet.