NEW YORK (AFP) — Oil prices ended higher Friday on the first day of 2009 trading Friday as investors focused on commodities amid tensions over Israel's onslaught on Gaza, and a Russia-Ukraine gas row.
New York's main contract, light sweet crude for February, rose 1.74 dollars from its closing price on Wednesday to end at 46.34 dollars Friday on the New York Mercantile Exchange.
In London, Brent North Sea crude for delivery in February advanced 1.32 dollars to settle at 46.91 dollars a barrel on the InterContinental Exchange.
Traders said prices were extremely volatile in a reflection of thin market turnover as many investors remained in a New Year holiday mood ahead of the weekend.
"The volatility is amazing," said independent analyst Ellis Eckland, noting that investors were refocusing on commodities after experiencing their "worst quarter."
"Some people are putting money into the commodities. Some institutions look and say, 'Wow, commodities have had the worst quarter they've ever had,'" Eckland said.
The market experienced a tumultuous 2008, soaring to record highs above 147 dollars a barrel in July before a sharp global economic downturn slashed demand for energy and pulled prices sharply lower, dropping below 35 dollars in December.
"Prices have performed so poorly that people believe it won't get much worse," said Adam Siemisnki of Deutsche Bank.
"So I would say a combination of the stock market, some news on OPEC compliance, the gas issue, and the troubles in Israel," he said, summing up the market volatility Friday.
There were no signs Friday of an easing of Israel's bombardments on the Hamas-controlled Gaza Strip.
Since it unleashed its air and sea campaign last Saturday, at least 432 Palestinians have been killed and 2,150 others wounded, according to Gaza medics.
Amid the attacks, Hamas supremo Khaled Meshaal on Friday warned Israel that a "black destiny" awaits the Jewish state if it launched a ground offensive into the Gaza Strip.
The market was also closely monitoring a Russia-Ukraine gas row after Moscow cut supplies for the Ukrainian market on New Year's Day over unpaid bills that also raised concern in European Union states.
Siemisnki expected oil prices the coming week to be more indicative of the market fundamentals.
Analysts say the market had been supported by evidence that the OPEC oil producers' cartel was cutting output in line with an announcement last month.
Previous OPEC cuts have often been met with only partial compliance.
"OPEC is having some success in cutting production but my feeling is there is a long way to go yet," Siemisnki said.
Prices may remain at current levels until US president-elect Barack Obama takes office on January 20 when his policies on the US economy, key oil producer Iran and the Israeli-Hamas conflict become clearer for the market, said Platts analyst Dave Ernsberger.
Copyright © 2009 AFP. All rights reserved. More »
