Federal Reserve Chairman Ben Bernanke took the air out of a rally in the price of oil Thursday when he gave no signal of imminent action to help the U.S. economy.

Oil was slightly higher in afternoon trading after rising 2 percent prior to Bernanke's appearance before Congress. Meanwhile, natural gas prices plunged 5 percent after the government said that already plentiful supplies continued to expand last week. The supply is about 31.4 percent above the five-year average.

Bernanke said the Fed remains ready to act if Europe threatens the U.S. economy. But he didn't indicate that any new steps were on the way. Oil traders had hoped that the Fed would consider taking measures to promote growth after recent economic data, particularly the jobs report for May, painted a picture of slower economic growth.

Benchmark oil rose 37 cents to $85.40 per barrel in New York. The price hit $87.03 per barrel earlier after China cut its benchmark lending rate for the first time in nearly four years to try to reverse a slowdown in economic growth.

Gene McGillian, a broker and oil analyst at Tradition Energy, said that China's rate cut could benefit oil prices by boosting economic growth and demand for oil in the world's second-largest economy. China imported 5.6 million barrels per day from January through April. That's up from 5.16 million barrels a day in the same period a year ago, according to the Energy Information Administration. But recent reports indicated that China's manufacturing sector, a big consumer of oil, has slowed.

As for the Fed, it has several options it could consider to try and boost the economy. The Fed could buy more bonds to lower long-term interest rates, which would encourage more borrowing and spending. Or it could extend its plan to keep short-term rates near zero beyond late 2014.

The Fed's previous stimulus efforts boosted oil prices because lower interest rates reduced the value of the dollar against other currencies. Commodities like oil are priced in dollars so the weaker dollar makes them cheaper for traders who use other currencies.

McGillian said Bernanke left policymakers with room to maneuver in case the U.S. economy grows weaker or Europe's financial crisis worsens. In particular, traders are closely watching a June 17 election in Greece that could force the financially troubled country to leave the union of countries that use the euro as currency. There are growing concerns that Greece's departure could cause the European Union to collapse and hurt the global economy.

Brent crude, which is used to price international varieties of oil, rose 3 cents to $100.67 per barrel in London.

In other trading, natural gas prices fell 12 cents, or 5 percent, to $2.30 per 1,000 cubic feet. Supplies of the fuel have been building because of a boom in production and weak demand caused by mild weather.

Heating oil rose 1 cent to $2.68 per gallon and gasoline futures added 1 cent to $2.70 per gallon.

At the pump, the national average for a gallon of gasoline fell half a cent overnight to $3.56 per gallon, according to AAA, Wright Express and the Oil Price Information Service. That's about 20 cents less than it was a month ago.