LONDON, Oct 18: World oil prices rebounded close to recent records on Thursday as traders tracked Middle East tensions and the weak US dollar, and warned of crude striking $100 per barrel.

New York’s main futures contract, light sweet crude for delivery in November, jumped $1.49 to $88.89 a barrel after hitting an historic $89 exactly on Wednesday.

Elsewhere on Thursday, London’s Brent North Sea crude for December delivery won 65 cents to reach $83.78. The November contract expired on Tuesday after striking an all-time high of $84.49.

This week, oil blazed a record-breaking trail as traders seized on simmering tensions along the Turkey-Iraq border.

Prices also won support from the weak US dollar, which makes dollar-priced commodities cheaper for buyers with stronger currencies and, therefore, lifts crude demand. The euro hit a record high $1.4310 earlier on Thursday.

“The issue seems no longer to be whether oil will reach $100 per barrel, but when,” said Barclays Capital analyst Kevin Norrish.

“Once the furore has settled down, the oil market as a whole can get on the job of working out whether supply and demand dynamics mean that long-term prices should have two or three digits.” Crude futures had finished lower on Wednesday on profit-taking after a stronger-than-expected US energy stockpiles report offset geopolitical worries surrounding oil exporters Iraq and Iran.

But the price of Brent oil has leapt by more than 10 per cent in the last eight trading days, while New York crude has rocketed by about 12.5 per cent in value.

Iraq’s Kurdish administration called on Thursday for direct negotiations with Ankara as thousands of fearful Iraqi Kurds took to the streets to protest against the Turkish military threat.

“Despite the green light for possible military action, it is not certain when or whether the Turks will go in, and there is frantic diplomacy going on in order to dissuade them from doing so,” said MF Global analyst Edward Meir.

Market participants are on edge over the issue because northern Iraq is home to some of the troubled country’s largest oil fields.

Traders are also jittery about tight global energy supplies, particularly during the northern hemisphere winter when demand surges for heating fuel.

However, the US Department of Energy said that American crude reserves jumped 1.8 million barrels last week. Stockpiles of distillates, which include diesel and heating oils, leapt by one million barrels.

“The bearish numbers were partly offset by yet another drop in refinery utilisation rates, reminding participants that refineries are still thinly stretched going into the winter,” added Meir.

Prices had also spiked on Wednesday after US President George W. Bush reignited market concerns over the Iranian nuclear crisis.

Highlighting the uncertainties in the Middle East, Bush said he had warned world leaders they must prevent crude producer Iran from getting nuclear weapons “if you’re interested in avoiding World War III.”

Petromatrix analyst Olivier Jakob said the comments added a “fear factor” premium to the prices. “The psychological warfare between the US and Iran translate to an additional risk premium into oil futures,” he said.

—AFP