(Oil prices story updated for Thursday close)

NEW YORK (

TheStreet

) -- Oil prices flip-flopped on Thursday -- opening lower, climbing higher at mid-day, and then giving back gains -- and above all the see-saw trading action, the important driver for the oil trade remains the same: key geopolitical triggers are still in place for elevated oil prices, and fears of demand destruction in the global economy haven't yet proven to be a headwind.

Light sweet crude oil opened lower on Thursday morning, though within an hour of the market open crude oil had sneaked back into the green, and was trading above $106. Light sweet crude oil settled lower in the afternoon, though, at $105.60. Crude oil had climbed as high as $106.69 earlier in the day.

Thursday was the first trading session this week during which light sweet crude declined at the open, and in a reversal from the most recent action, Brent crude was was the oil trade ending the day higher, at $115.70.

On Wednesday, the divide between the rising price of light sweet crude on the Nymex and the decline in Brent crude indicated a European focus on the debt problems in Portugal and Ireland, while U.S. crude futures traded up on the Middle East political unrest and Libyan conflict.

Yet even with the Portuguese Prime Minister Socrates resigning late on Wednesday and the EU budget discussions leading to headlines on Thursday that Portugal would receive a bailout package from the EU, energy market analysts have maintained that European budget issues pale in comparison to the Middle East, and oil prices will remain tethered to the Mideast outlook. In any event, the tug of war between macroeconomic factors and Middle East unrest did seem to be serving as competing factors on Thursday, and some profit-taking resulted from a relative lack of new "fear" headlines from the Middle East region.

The Libyan fighting continued with the U.S. and its allies unable to stop the forces of Gadhafi from shelling Libyan towns. Meanwhile, Syria continued to violently crack down on protests and Yemen's government clashed with resistance groups.

The barrage of headlines from the Middle East won't slow, and some energy traders believe the Middle East trigger for the oil trade will soon be joined by additional justifications for higher oil prices.

Energy trader Phil Flynn, market strategist at PFG Best, wrote on Thursday morning, "While many have tried to minimize the upside risks to the price of a barrel of oil for the last month, the truth is we have very strong fundamental justification for where the price of oil is at and where it is probably going."

PFG Best's Flynn thinks that in addition to concerns about a stalemate in Libya as its oil exports and production are down to a trickle, and a conflict involving Israel, a global pullback from nuclear energy that will increase oil demand by at least a couple of millions of barrels of oil a day spare production capacity, and the looming summer driving season in the U.S., means the global oil market is getting tighter by the minute.

The U.S. crude oil inventory data showed on Wednesday a significant draw-down in crude oil ahead of the peak summer driving season.

"The market cannot afford another disruption by any other country at this point. We are targeting $108 then $110 on WTI."

After a sluggish start, the energy sector ended Thursday up 0.5%, though it trailed the broader equity market returns, which climbed in the afternoon after an opening bell decline. The Dow Jones Industrial Average ended Thursday trading up 0.7%. The S&P 500 was higher by 0.9%.

-- Written by Eric Rosenbaum from New York.

>To contact the writer of this article, click here:

Eric Rosenbaum

.

>To follow the writer on Twitter, go to

Eric Rosenbaum

.

>To submit a news tip, send an email to:

tips@thestreet.com

.