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Crude Oil Rises After Israeli Attacks on Gaza Roil Middle East |
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administrator |
DATE |
2008-12-29 09:54:14 |
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Crude Oil Rises After Israeli Attacks on Gaza Roil Middle East
By Gavin Evans, Dec. 29. 2008
Crude oil rose a second day in New York after Israeli air strikes in the Gaza strip killed more than 285 people, heightening geopolitical tensions in the Middle East and prompting some investors to buy commodities as a haven.
Oil gained as much as 3.9 percent as Israel called up reservists after two days of air attacks on the Hamas-controlled region. Saudi Arabia, the world's biggest oil producer, condemned the ``brutal'' attacks while Syria told the United Nations to end ``massacres against defenseless Palestinians.'' The Middle East produces almost a third of the world's oil.
``Geopolitical issues out there in the Middle East'' are helping drive prices today, said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. ``A big enough supply-side issue, real or potential, is definitely something that the market could latch onto to stage a bit of a recovery.''
Crude oil for February delivery rose as much as $1.47 to $39.18 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $38.83 at 8:21 a.m. in Singapore.
Oil jumped 6.7 percent to $37.71 on Dec. 26, the biggest gain in two weeks for a contract closest to expiration. Prices rose as OPEC member-states cut output to prevent a glut and Israel threatened to retaliate for a string of rocket attacks since a six-month truce with Hamas collapsed on Dec. 19.
Brent crude oil for February settlement climbed $1.33, or 3.5 percent, to $39.70 a barrel on London's ICE Futures Europe exchange. The contract gained 4.8 percent to $38.37 on Dec. 26.
Slide From Record
New York oil futures fell 11 percent last week and have dropped 74 percent from the record $147.27 a barrel in July on signs the deepening global recession is cutting demand for fuel and energy. Oil reached a four-year low of $32.40 on Dec. 19.
Investors seem focused on weak demand and the prospects for the U.S. government's rescue package for the nation's automakers, Commodity Warrants' Hassall said. Daily price moves are also being exaggerated by thin, holiday-affected trading, adding to the difficulty in judging whether recent gains are anything more than a short-term rebound.
``Maybe the market is starting to look forward a little bit more,'' Hassall said. ``There is some expectation that we are going to see the physical market tighten up a little bit as a result of OPEC cuts.''
The Organization of Petroleum Exporting Countries, supplier of more than 40 percent of the world's oil, agreed on Dec. 17 to trim daily production targets by 2.46 million barrels next month.
World oil demand will average 86.6 million barrels in the first quarter of 2009, down 0.2 percent from a year earlier, before recovering to unchanged in the second quarter, the International Energy Agency said in a Dec. 11 forecast.
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