LONDON, Jan 8: Oil prices jumped more than $2 on Tuesday, reversing three days of losses as traders bet on a further falls to energy inventories in key consumer the United States.

Despite rising, prices remained well off historic highs of above $100/barrel that were reached last week.

New York’s main contract, light sweet crude for delivery in February, jumped $2.21 to $97.30 in floor trading.

It struck a record high of $100.09 last Thursday but fell heavily thereafter as traders took profits.

Brent North Sea crude for February rallied $2.10 to $96.49.

Its record set last week is $98.50.

“The petroleum market has rebounded sharply from Monday’s slide as bargain hunting emerged at the lower levels as traders anticipate a further decline in US crude oil stocks in Wednesday’s inventory report,” said Citigroup analyst Tim Evans.

The US Department of Energy (DoE) was due on Wednesday to publish its weekly snapshot of American crude stockpiles for the week ending January 4.

Oil prices had fallen sharply on Monday despite the Pentagon reporting a weekend encounter between the US Navy and Iranian vessels in the strategic Strait of Hormuz.

Traders said prices also declined as some speculators engaged in a bout of profit-taking amid lingering fears that slower US economic growth could dent global energy demand.

Prices had briefly pushed higher after the Pentagon said three US warships had been harassed on Sunday by five Iranian speedboats in the Strait of Hormuz, which is a crucial gateway for global energy supplies.

The Strait of Hormuz is a vital outlet for world energy supplies because crude exports from oil-rich Gulf Arab countries pass through the strait -- or about 20-25 per cent of the world’s crude.

Traders predict cautious trade ahead of the next meeting of the Organisation of the Petroleum Exporting Countries on February 1.—AFP