Crude-oil futures rallied above $109 a barrel on Friday, extending gains to a seventh session and posting a weekly rise of 6% on ongoing concerns about supply disruptions.
Crude for April delivery rose $1.94, or 1.8%, to $109.77 a barrel on the New York Mercantile Exchange. That brought weekly gains to 6%, oil’s largest weekly percentage advance since Dec. 23.
The close was also oil’s highest since May 3, when oil closed at $111.05 a barrel.
Prices hit $113.93 a barrel on April 29, a 52-week high, as concerns about geopolitical tensions in the Middle East had also taken center stage.
Crude oil is up 11% so far this month.
The spike has come amid fears that Iran might stop oil exports to some European nations after the European Union last month imposed an oil embargo on the Middle-Eastern oil producer and the spat between Iran and Western powers continued. A lower dollar also provided support for higher oil prices.
Analysts have said that the price of oil has carried a “fear premium” of $10 to $20 a barrel in recent weeks.
An official at the International Monetary Fund said Thursday that a halt of Iran’s oil exports to the Organization for Economic Cooperation and Development countries could trigger a 20% to 30% jump in prices.
The price increase has also triggered deeper worries about the impact on global economic growth, with concerns centering around gasoline futures prices. Prices at the pump have soared in recent days, prompting a speech by President Barack Obama on Thursday.
March gasoline futures rose 4 cents, or 1.3%, to settle at $3.15 a gallon. Weekly gains for gasoline reached 4.6%, with prices up 9.2% so far in February and 17% year-to-date.
Heating oil for the same month’s delivery turned higher, ending the day up 2 cents, or 0.6%, to end at $3.32 a gallon. In the week, heating oil gained 4%.
Both front-month contracts expire next week.
“Sanctions and embargoes enacted to date may be having an impact on Iran’s economy in other areas, but it looks as though oil revenues are up along with prices. So far, oil speculators and oil producers are benefiting from the policy, while oil consumers are paying the price,” said Tim Evans, an oil analyst with Citigroup’s Citi Futures Perspectives, in a note.
Retail gasoline prices continued to creep up, with the national average for regular gasoline on Friday reaching $3.647 a gallon from $3.612 on Thursday, according to travel and leisure group AAA. That compares to a week-ago average of $3.529, and a month-ago average of $3.379. Last year, consumers were paying $3.228 a gallon on average.
The national average for retail gasoline hit a record in July 2008, when drivers paid $4.11 per gallon.
March natural-gas futures, meanwhile, slipped 7 cents, or 2.7%, to settle at $2.55 per million British thermal units.
Weekly losses for natural gas, which has been beset by a mild winter in most of the key consuming U.S. areas and ever-growing production from shale gas, reached 5%.
Source: Claudia Assis and Clare Hutchison, MarketWatch.com