NEW YORK (AFP) — Oil prices creeped higher Thursday in choppy trade, after major central banks flushed hundreds of billions of cash into the tight banking system in a bid to calm roiling financial markets.
New York's main contract, light sweet crude for delivery in October, rose 72 cents to close at 97.88 dollars a barrel.
It hit an intra-day high of 102.24 dollars before investors took flight in the financial storm.
In London, Brent North Sea crude for November advanced 35 cents to settle at 95.19 dollars.
The US Federal Reserve in joint action with other central banks poured more than 300 billion dollars into the money markets earlier Thursday in an effort to curb a growing global credit crisis.
"Even though market movements these days are more sensitive to financially related news than items of a fundamental import, today's rally seems to acknowledge the underlying fundamentals and the geopolitical uncertainty surrounding oil supplies, as a result capital, buffeted by recent events, may find a measure of stability in commodities, generally," said Mike Fitzpatrick, analyst at MF Global.
Oil prices had jumped about six dollars on Wednesday after the US government's 85-billion-dollar bailout of insurance giant AIG failed to reassure skittish traders and prompted a rush into commodities as a safe haven from the financial market storm.
"Oil even got caught up in the commodity mania but really its place as a hedge against this crisis has run its course. If there is no money to lend to build factories or buy Chinese goods then why in the world will we need so much oil?" said Phil Flynn at Alaron Trading.
After this week's series of multibillion-dollar bailouts, the collapse of Lehman Brothers and rapidly engineered takeovers in the finance sector, investors anxiously eyed the two remaining large investment banks, Morgan Stanley and Goldman Sachs, and Washington Mutual, the largest US savings and loan bank.
With markets turbulent, analysts said investors paid little attention to an "oil war" launched last weekend by militants against oil companies operating in Nigeria and tighter US crude reserves.
The Movement for the Emancipation of the Niger Delta has hit several installations operated by multinational oil giants, claiming the attacks were in response to an unprovoked attack by the army on one of its positions.
Wednesday's weekly report on US energy inventories provided some additional backing for prices, with US crude reserves down 6.3 million barrels in the week ended September 12 when US energy production was severely hampered by Hurricane Ike in the Gulf of Mexico.
"(US) inventory numbers were an afterthought, as too was the declared oil war in Nigeria. Nigerian rebel groups have joined forces to destroy oil infrastructure and it's hard to tell if the market really cared. A major terror attack in Yemen hardly caused a ripple," Alaron's Flynn said.
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