Monday, Dec 29, 2008
Crude oil rose for a second day after Israeli air strikes in the Gaza strip raised concerns that supply from the Middle East, the world’s largest producing region, may be disrupted.
Defense Minister Ehud Barak said Israel is fighting a “war to the death” with Hamas, the group that controls Gaza. Prices also advanced as China, the world’s second-biggest energy consumer, said it will supplement its emergency oil stockpiles while prices are low, and the United Arab Emirates announced compliance with OPEC production cuts agreed on this month.
“The instability in the Middle East may well push oil prices higher,” said Rob Laughlin, a senior broker with MF Global Ltd. in London. “China’s plans to stockpile crude may take up some slack from the demand destruction from the economic slowdown.”
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Crude oil for February delivery rose as much as $4.49, or 12 percent, to $42.20 a barrel in electronic trading on the New York Mercantile Exchange. It was at $40.44 at 11:10 a.m. in London. Today’s gain pares oil’s plunge from its $147.27 a barrel record on July 11 to 73 percent.
Hamas, the militant Islamist group that seized control of Gaza last year, is backed by Iran and considered a terrorist organization by the United States. Iran holds the world’s second-largest oil reserves and sits on the narrow sea channel through which oil from the Persian Gulf is shipped.
Futures prices fell 11 percent last week, reaching a four- year low of $32.40 on Dec. 19.