Oil rises to near $88 a barrel

Oil rose near $88 a barrel yesterday, after a late surge in US stock indices helped cool simmering fears of a recession in top energy consumer the United States.

US crude jumped 96 cents to $87.95 a barrel by 0848 GMT, after settling at a 13-week low of $86.99 in the previous session. London Brent crude rose 97 cents to $87.59.

"An impressive price surge at the close of Wall Street has led to a rebound in energy prices," said Robert Laughlin of MF Global.

US stocks reversed a five-day slide on Wednesday buoyed by hopes that a government-backed plan to rescue battered bond insurers would stave off a fresh round of billion-dollar writedowns. Asian and European equity markets were higher on Thursday in response.

Oil has lost more than $3 this week.

Analysts said funds and speculators had been closing out their positions in oil and commodities to cover margin calls and to finance losses in equity markets.

"At least for the next few weeks, we will be putting inventory data and the weak dollar on the backburner," said Jim Ritterbusch, president of Ritterbusch & Associates.

On Wednesday Qatar's oil minister said OPEC did not need to boost output when it meets on Feb 1 to determine production policy, and expressed concerns that demand could take a blow if a recession hit.

While US oil is down almost 13 percent from the all-time peak above $100 a barrel hit on Jan 3, prices remain up more than 60 percent from year-ago levels.

Agencies

(China Daily 01/25/2008 page17)