LONDON, Nov 5: Oil prices rallied above $49 on Friday, partly reversing sharp falls on technical factors and worries over the critical condition of Palestinian leader Yasser Arafat, analysts said.
New York's main oil contract, light sweet crude for delivery in December, rose by 48 cents to $49.30 a barrel in early deals. The contract tumbled by over $2 a barrel on Thursday to a six-week low as traders' relief at a sharp rise in US crude inventories finally overwhelmed a rally sparked by the re-election of US President George W. Bush.
In London the price of Brent North Sea crude oil for December delivery won 39 cents to $46.40 a barrel in late trading on Friday. "Arafat's ill health is adding tension and underpinning prices ahead of the weekend," said Informa Global Markets analyst Peter Luxton.
Dealers were wary after the Palestinian authority and Israeli government stepped up security and made preparations to prevent a descent into anarchy in the event of the veteran leader's death.
Meanwhile, fears of a winter supply crunch in the United States have eased after the US Energy Department reported Wednesday that crude oil inventories rose 6.3 million barrels to 289.7 million barrels in the week to October 29.
However, markets remain concerned about the low levels of US stockpiles of distillates - mostly crucial heating oil and diesel. Distillates dropped 900,000 barrels to 115.7 million, below the average range for this time of year, the US Energy Department said.
A "strong natural gas build in the US has continued the recent trend of strong US crude inventory data, which has caused oil prices to skid lower", said Luxton. Brent prices have fallen $4 a barrel this week after the rise in US crude inventories offset the positive influence of Bush's uncontested electoral victory. -AFP
