Oil rebounds to $128 in gasoline-led rally, Iran deadline

LONDON - Oil rebounded above $128 a barrel in volatile trading on Friday, led by a surge in U.S. gasoline futures which offset early worries about sluggish economic growth in the world's top energy consumer.

By (Reuters)

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Published: Fri 1 Aug 2008, 10:41 PM

Last updated: Sun 5 Apr 2015, 11:47 AM

U.S. light crude for September delivery rose $2.75 to $126.83 a barrel by 1500 GMT, off highs of $128.60. It had dropped to as low as $122.10 on top of a $2.69 fall in the previous session.

London Brent crude rose $2.07 to $126.05 a barrel.

'It seems to be gasoline-led,' said Jim Ritterbusch, President of Ritterbusch & Associates in Illinois, as U.S. gasoline prices surged more than 4 percent, leading the entire oil complex higher.

U.S. crude fell nearly $2 earlier on Friday, extending its decline from the previous session on weak U.S. economic data that showed weaker-than-expected economic growth and a sizeable increase in jobless claims amid high energy prices.

The market also took heart from smaller-than-feared job losses in the United States. The U.S. labor department said 51,000 non-farm jobs were eliminated in July, fewer than the 75,000 forecast by economists.

Oil has fallen from a record above $147 a barrel hit on July 11, the peak of a six-year rally set in motion by an Asian economic boom. Oil's 11.4 percent loss for the month of July marked the biggest monthly decline in percentage terms since December 2004.

Moody's Economy.com economist Matt Robinson said he expected crude oil prices to continue drifting lower, averaging around $110 a barrel in the fourth quarter.

The Reuters-Jefferies CRB Index, an index of 19 commodity futures with a bias towards energy products such as crude oil and natural gas, saw its biggest decline in 28 years in July. The index lost 10 percent during the month, the steepest drop since it fell 10.5 percent in March 1980.

But market concerns about OPEC member and the world's fourth biggest oil exporter Iran, which remains locked in a tense standoff with the West over its nuclear programme, and supply disruptions in Nigeria have offered some support to oil prices.

Iran has a weekend deadline to respond to an offer made by major powers to hold off imposing more sanctions in exchange for freezing any expansion of its nuclear work.

Nigeria's crude oil production fell by 150,000 barrels per day after Monday's militant attack on a major pipeline in the Niger Delta, an official with state-run oil company NNPC said on Friday.

This week's rebel attacks in Nigeria added to a string of bombings that has disrupted the OPEC nation's production.

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