Oil prices aim higher on US rate cut hopes
LONDON (AFP) — World oil prices edged higher Friday amid ongoing geopolitical tensions and hopes that the US Federal Reserve will cut rates aggressively in a bid to boost the ailing American economy, traders said.
New York's main contract, light sweet crude for delivery in February, added ten cents to reach 93.81 dollars per barrel.
Brent North Sea crude for February firmed by just three cents to 92.25 dollars per barrel.
Despite the marginal gains, oil prices have dropped about two dollars this week amid widespread fears that slowing economic growth in the United States could dampen demand from the world's number one oil consumer.
US Federal Reserve chairman Ben Bernanke said Thursday that economic prospects for 2008 have worsened and that the US central bank stands ready to take "substantive additional action" to support growth.
Traders took that as a clear signal the Fed was set to cut US borrowing costs, probably by half a percentage point, later this month.
Fears of a potential US recession have haunted the market this week.
"There is no doubt that a deep recession in the US could have a negative impact on energy demand," said Sucden analyst Andrey Kryuchenkov.
However, traders warned that there could be another run at 100 dollars per barrel due to lingering geopolitical concerns elsewhere.
Analysts said prices were benefiting from news of further attacks in Nigeria, where a tanker was ablaze Friday in the main oil city of Port Harcourt, police said.
"A rescue ship has been sent to extinguish the flames," police chief Felix Ogbaudu told AFP.
Earlier this week, prices got a lift from news that militants fighting for a greater share of the Nigeria's energy wealth had staged an attack on four oil vessels in the Bonny River.
The price boost was short lived, however, as players soon turned their attention increasingly gloomy US economic prospects and to news of large increases in US fuel stocks.
The US Department of Energy (DoE) reported Wednesday that US gasoline and distillate stocks rose last week by a much larger-than-expected 5.3 million barrels and 1.5 million barrels, respectively.
Traders' thoughts are meanwhile turning to a production meeting of the OPEC oil producers' grouping in Vienna next month.
Ministers from the Organisation of Petroleum Exporting Countries, which accounts for about 40 percent of global crude supplies, will convene in the Austrian capital on February 1.
Top of their agenda will be recent record-breaking oil prices. Last week, New York oil hit an historic 100.09 dollars per barrel and Brent surged to an all-time peak at 98.50 dollars.
