Oil prices are again flirting with $US80 a barrel after a two-week rally fueled by promising economic reports and worries that troubles in Europe and the Middle East could eventually tighten supplies.
Benchmark crude for March delivery added 75 cents to settle at $US79.81 a barrel on the New York Mercantile Exchange. The price of the March contract, which ends on Monday, has increased by 12 per cent since February 5.
Most of the trading already has moved to the April contract, which added 64 cents Friday to settle at $US80.06 a barrel.
Oil supplies in the US are still high for this time of year with petroleum consumption slumping to 11-year lows. But with new home construction, industrial production and manufacturing reports all showing signs of growth this week, there is rising confidence that Americans will regain their appetite for fossil fuels in the second half of the year.
Meanwhile, investors continued to focus on problems with refineries in France, where workers at a refinery for oil giant Total have been striking since January 12. The US imports petrol and other fuels from Europe, and concerns over disruptions in European refining have helped push energy prices higher.
Also, the United Nations' International Atomic Energy Agency said on Thursday that Iran may be working on a nuclear warhead, raising concerns about a military build up in the region and the availability of oil supplies from the Persian Gulf.
"The fear of Iran has always been instrumental in the price run-ups of 2007 and 2008, fueling the 'what-if' scenarios that are necessary for bull runs and this year might not be different," said analyst Olivier Jakob of Petromatrix in Switzerland.
Energy prices dipped earlier in the day following Thursday's Federal Reserve announcement that it will bump up the so-called "discount" lending rate. That sent the dollar to its highest level since May. Crude, which is priced in US currency, tends to fall in price as the dollar rises and makes oil barrels tougher to buy for investors holding foreign money.
But a Labor Department report on Friday morning said consumer prices excluding food and energy fell in January for the first time since December 1982. That tempered concerns about future inflation, analyst Phil Flynn said.
In London, Brent crude fell 6 cents to $US77.72 on the ICE futures exchange.
-------------------------------------------------------------------------------- Source:By Chris Kahn
SSN Price at posting:
2.5¢ Sentiment: Hold Disclosure: Held
