Oil prices firm after run at 100 dollars

People at a gas station in Spain
©AFP/File - Raymond Roig

NEW YORK - World oil prices pushed closer toward 100 dollars a barrel Friday as traders worried about tight supplies and geopolitical jitters in key oil producing states.

New York's main contract, light sweet crude for January delivery, rose 99 cents cents to a record close of 98.18 dollars per barrel. The contract had hit a historic intraday record high of 99.29 dollars on Wednesday.

In London, Brent North Sea crude for January delivery added 92 cents to settle at 95.76 dollars per barrel, after striking an all-time peak of 96.53 dollars on Wednesday.

Crude futures have failed to top 100 dollars this week despite US government data which showed that US energy stockpiles fell more heavily than expected last week.

The price rally fizzled out amid the US Thanksgiving holiday weekend, with New York's financial markets shut on Thursday.

Prices remained strong Friday amid indications that some member nations of the 13-strong crude exporters's group OPEC might increase output, which would have a dampening effect on the market.

However, Sucden analyst Michael Davies said:"Another OPEC output increase is no certainty as many members have said that more crude is unlikely to calm a rally driven by speculators and geopolitical tensions."

The price of oil has surged by about 64 percent since the start of 2007, supported by supply disruptions in key producers such as Nigeria, strong demand from China and India, and jitters over the Iranian nuclear crisis.

In Vienna on Friday, the UN atomic watchdog sat down to its second and final day of debate on Iran's disputed atomic drive at a board meeting, which was expected to be wrapped up by the afternoon.

Western nations, led by Washington, accuse Iran of secretly trying to build a bomb, a charge Iran vehemently denies, saying it is only seeking a technology to generate electricity for a growing population.

"Iran's top nuclear negotiator Saeed Jalili is set to meet EU foreign policy chief Javier Solana on November 30 over Iran's nuclear program," Davies added.

"The outcome of the meeting could lead to Iran facing wider sanctions, which could result in more geopolitical related support for oil."

Oil prices have also won support from the troubled US dollar, which has struck a series of record low points against the surging euro in recent weeks.

A weak US currency encourages demand for dollar-denominated commodities, like crude oil, because they become more attractive to investors using stronger currencies.