AP
Oil Prices Back Above $83 a Barrel
Friday September 28, 4:39 am ET
Oil Prices Back Above $83 a Barrel on Supplies Concerns, Tensions Over Iran


BANGKOK, Thailand (AP) -- Oil prices rose back above US$83 a barrel in Asian trade Friday, adding to gains in the previous session sparked by a decline in crude inventories at a key Oklahoma terminal and the confrontation between the West and Iran.

Light, sweet crude for November delivery rose 29 cents to US$83.17 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore.

The Nymex crude contract jumped US$2.58 Thursday to settle at US$82.88 a barrel during the floor session.

Tensions between the U.S. and Iran have raised in traders' minds the possibility of disruption of Middle East oil supplies, analysts said.

The U.S. is trying to raise support for new U.N. sanctions against Iran over its nuclear programs. Iranian President Mahmoud Ahmadinejad says the nuclear issue is "closed," and has vowed to defy any U.N. sanctions.

The price gains have put the front-month contract back near the record levels hit late last week by the October contract on the day it expired. Last Friday the October contract hit US$83.90 a barrel before it settled at a record close of U$83.32 a barrel.

Also stoking concerns about crude supplies was a slight decline in oil inventories at the Nymex crude delivery point of Cushing, Oklahoma, last week. That decline was about the only element of Wednesday's inventory report by the Energy Department's Energy Information Administration that was supportive of prices, analysts said. But it was enough to spark a late rally on Wednesday and to boost oil prices again on Thursday.

Analysts said a number of tropical weather systems were not affecting prices, as none are forecast to disrupt critical gas and oil infrastructure in the Gulf of Mexico.

In addition to the supply concerns, energy traders continue to be encouraged by positive economic reports, analysts say.

Energy investors are closely monitoring whether the problems affecting the subprime lending industry will spread, causing a wider economic slowdown and affecting demand for oil and gasoline.

Also supporting high oil prices are the weak dollar and unrest in Nigeria. The weak dollar makes oil seem inexpensive to people dealing in other currencies.

In Nigeria, Africa's biggest oil producer and one of the top overseas suppliers to the United States, a foreign oil worker was killed and another kidnapped.

November Brent crude rose 32 cents to US$80.35 a barrel on the ICE futures exchange in London.

Heating oil futures rose 0.6 cent to US$2.2581 a gallon (3.8 liters) while gasoline prices fell 0.19 cent to US$2.092 a gallon. November natural gas futures fell 0.7 cent to US$6.912 per 1,000 cubic feet.