Oil prices drifted up to levels not seen for two months on Friday, but the main factors moving the crude market were technical as investors covered their short positions and market fundamentals remained little changed.
Benchmark Brent North Sea crude for March delivery was selling for $28.42 a barrel from $28.10 at the close Thursday. Brent last traded this high on December 5.
In New York, the reference light sweet crude March contract climbed 63 cents in early deals to $30.45.
Schroder Salomon Smith Barney head of trading Peter Gignoux said that there were no major fundamental factors pulling the market around, and that technical plays were dominating.
"There is no fundamental news behind it, there is no supply disruption, the weather in Europe is moderate, the weather in the United States is cold but nothing desperate, but when a short covering rally begins it begins and there you go," Gignoux said.
Short-covering involves traders buying back oil which they have earlier sold in anticipation of rising prices.
"We will just see how long it lasts because it is another blip, but I do not think it is sustainable," Gignoux said.
On Thursday, a five-percent output cutback agreed by the Organization of Petroleum Exporting Countries (OPEC) came into force, and this could be playing on traders' minds, said GNI brokerage analyst Lawrence Eagles.
Prices could however trend lower next week if Iraqi exports show signs of returning to full strength, after weeks of stop-start volume flows through its outlet in Ceyhan, Turkey.
But Eagles said: "It seems fair to argue that exports will continue to be erratic for some time. "This will clearly be supportive." — (AFP)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com )