Oil headed for its biggest weekly gain in two years on concern the turmoil which has cut Libya's output may spread to other parts of the Middle East and speculation the U.S. economic recovery will boost fuel demand.
Futures fluctuated today after the U.S., Saudi Arabia and the International Energy Agency made assurances they can compensate for any disruption of Libyan supplies. Crude surged to a 29-month high yesterday amid estimates the country's output was cut by as much as two-thirds. The U.S. economy expanded faster than expected in the fourth quarter, according to a Bloomberg News survey.
"Supplies should be secured by other countries as long as the disruptions are limited," said Tetsu Emori, a commodity fund manager with Astmax Ltd. in Tokyo. "When oil prices reached $147 in 2008 the economy was already pushing lower, but currently the economic situation is expanding on a global basis."
Crude for April delivery gained as much as 69 cents to $97.97 a barrel in electronic trading on the New York Mercantile Exchange and was at $97.67 a barrel at 2:09 p.m. Singapore time. Yesterday, it fell to $97.28 after climbing as high as $103.41. Prices earlier today dropped as much as 0.9 percent to $96.39.