Oil prices settled above US$59 a barrel on Friday, finishing the week at its highest close for this year. Colder-than-normal weather in the US and concerns over a second round of OPEC production cuts fueled the week's rally.
Heightened geopolitical risks also helped boost prices on Friday.
Light, sweet crude for March delivery rose US$1.72 to settle at US$59.02 a barrel on the New York Mercantile Exchange. That was the highest close since it finished at US$61.05 on the last trading day of last year.
In after-hours electronic trading on Friday, the contract climbed further, reaching US$59.25 a barrel by late afternoon.
Brent crude for March delivery gained US$1.69 to settle at US$58.41 a barrel on Friday on the ICE Futures exchange in London.
Below-normal temperatures across the US buoyed oil prices this week after an unseasonably warm January sent prices as low as US$49.90 a barrel.
A winter storm rushed across the US Southeast on Thursday, grounding flights a day after coating roads with ice in the Midwest. Below-normal temperatures are expected this weekend for the Northeast, the nation's main heating oil consuming region.
Concerns were also stoked on Friday by a threat from the two main Nigerian oil workers' unions to strike next week in protest of rising violence in the country's petroleum-producing southern region.
The 20,000 blue and white-collar union members "are of the opinion that the environment is not safe enough for them to continue operation," said Peter Akpatason, one of the union's leaders on behalf of both unions.
Meanwhile, increased tensions between Washington and Iran remain on the radar as traders worry that a confrontation between the two could lead to a disruption in oil production. Last week, Iran announced new tests of short-range missiles, while the US Navy sends a second aircraft carrier to the Persian Gulf as a warning.
"It's the same general thing, except there are more rumors at least of war," said John Kingston, director of oil at Platts, a division of McGraw-Hill Cos. But Kingston said he considers Iran's struggle to keep production up as more of a concern long-term than the potential for a confrontation between Iran and the US.
"There's continued bullish momentum with the cold weather and a change in market psychology when it comes to geopolitical risks," said Phil Flynn, an analyst at Alaron Trading Corp in Chicago.
Expectations that the Organization of Petroleum Exporting Countries will tighten their spigots further are also likely to shore up crude oil prices.
The Wall Street Journal reported this week that Saudi Arabia has advised its customers of its impending 158,000 barrel a day output cut effective Feb. 1. The reduction is part of a December agreement by OPEC to cut output by 500,000 barrels a day on top of an earlier production cut of 1.2 million barrels a day.
Iran also stirred some worries in the natural gas market when it said last week that it may build a global natural gas cartel like OPEC with Russia. But Russian President Vladimir Putin shot down the idea on Thursday and rejected suggestions that Russia is using its energy reserves as a political weapon.
Natural gas prices settled at US$7.476 per 1,000 cubic feet (US$0.264 per cubic meter), down US$0.054.
"I'm not completely sure how a natural gas cartel would work anyway," Kingston said. "Natural gas is a series of isolated gas grids. It's not like oil which is interconnected."
In other NYMEX trading, heating oil futures rose US$0.025 to settle at US$1.6840 a gallon (US$0.4449 per liter), while gasoline futures rose nearly US$0.05 to US$1.5729.
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