Oil prices climbed back to near $113 a barrel Friday as a weaker dollar made crude more attractive to investors with other currencies and the conflicts in Libya and Syria raised risk premiums.
By early afternoon in Europe, benchmark crude for June delivery was up 40 cents at $113.26 a barrel in electronic trading on the New York Mercantile Exchange.
The contract added 10 cents to settle at $112.86 on Thursday and reached $113.97 during in the session, the highest since September, 2008.
In London, Brent crude for June delivery was up 44 cents to $125.46 a barrel on the ICE Futures exchange.
Investors have been looking for signs that this year’s surge in energy costs and a slowing U.S. economy will start to undermine consumer demand. U.S. gross domestic product grew an annualized 1.8 percent in the first quarter, down from 3.1 percent growth in the fourth quarter.
“Energy prices are now clearly in territory where we should start to see demand destruction set in,” said Edward Meir from MF Global in New York.
While U.S. gasoline supplies fell last week for a third consecutive week, a downward revision by the Energy Department’s Energy Information Administration of U.S. oil demand in February was likely due to softer demand for gasoline, analysts said.
Climbing prices are likely cooling appetite for gasoline, an argument “against a further rise of the oil price,” said a report from Commerzbank in Frankfurt. “But in light of the fighting in Libya, the unrest in the Middle East and the weakness of the U.S. dollar, the oil price remains well supported, and so we do not expect it to fall steeply, either.”
Syrian security forces opened fire on a demonstration Friday in the coastal city of Latakia — the heartland of the ruling elite — wounding at least five people as thousands took to the streets in several places across the country, witnesses said.
More than 450 people have been killed across Syria and hundreds detained since the popular revolt against President Bashar Assad began in mid-March.
“Syria only produces 400,000 barrels of crude oil a day, 0.5 percent of the world total,” Capital Economics said in a report. “However, a prolonged and violent political crisis in Syria will affect investment and tourism in the region overall, and add upward pressure on oil prices.”
On Friday, fighting between Libyan rebels and forces loyal to Moammar Gadhafi has spilled over into neighboring Tunisia.
In other Nymex trading in May contracts, heating oil rose 1.14 cents to $3.243 a gallon and gasoline fell 0.48 cents to $3.425 a gallon. Natural gas June futures were up 4.1 cents at $4.612 per 1,000 cubic feet.
