Oil prices bounced higher on Friday following two days of sharp declines that came on the heels of rising inventories of crude in the US and a move by China to cool its economy.
Prices rose ahead of the weekend as traders sought to protect themselves in the event of a supply disruption before Monday. But traders said they expect prices to move lower again by early next week in anticipation of the US Energy Department's next petroleum supply report.
Light crude for December delivery rose US$0.84 to US$51.76 per barrel on the New York Mercantile Exchange. In London, December Brent crude futures gained US$0.61 to US$48.98 per barrel.
By the end of the week, prices were still significantly lower than last Friday's Nymex record-setting settlement price of US$55.17 per barrel. The slide in prices began Wednesday after the US government said crude supplies had increased by 4 million barrels to 283.4 million barrels last week -- roughly double the increase Wall Street was expecting. Then China raised its interest rates for one-year loans on Thursday -- the first increase in more than nine years. Beijing is trying to curb rising investment that has been keeping economic growth at over 9 percent a year, caused oil demand to surge and has pushed inflation to a seven-year high.
Some analysts believe the recent oil price rally is over.
Ed Silliere, vice president of risk management at Energy Merchant in New York, said, "the latest leg -- if it is not in fact the last leg -- of the bull market, is over."
"When it nearly hit US$56 [on Monday], the market was really pushing the boundaries of its highs," said Daniel Hynes, energy analyst at ANZ Bank in Melbourne, Australia.
Recent price rises have been spurred by production outages in the Gulf, which has resulted in nearly 26 million barrels being locked in, along with supply disruptions and unrest in key producers Nigeria, Saudi Arabia, Iraq and Venezuela.
Despite the easing of prices, wary traders said they were on watch for a planned general strike today across Nigeria, where unions have threatened to disrupt supplies in the Niger Delta, the fifth-largest source of US crude.
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