Brent crude oil for October delivery was spiking $1.45 to $108.44 a barrel and West Texas Intermediate (WTI) light sweet crude oil for October delivery was rising 33 cents to $82.84.
"Brent has rallied back into positive territory on the comments from an European Union official that the EU may start issuing euro bonds in an effort to contain the debt crisis in the region," Summit Energy analyst Matt Smith explained. "This has also helped to pare losses for WTI."
Concerns of supply flow disruptions in the Middle East, triggered by a renewed escalation of hostilities between Hamas and Israel, may also be lending additional support to oil prices, according to optionsXpress senior commodity analyst Mike Zarembski.
"For WTI, we may see some short-covering buying emerge especially if U.S. equities remain
" Zarembski added.
Although both the Brent and WTI contracts were advancing on Friday, Brent's premium over WTI remained robust.
As Smith explained, "the comparative weakness seen in WTI over Brent is due to two reasons -- the underlying strength in the fundamentals of the European market due to the Libyan outage and North Sea issues, while the recent poor bout of economic data continues to weigh heavy on WTI -- despite the falling level of stockpiles at Cushing, Okla., where WTI is priced."
Zarembski says if the WTI October contract ends Friday below $80, expect to see traders liquidate their long positions.
He also urges investors to take note of the Libyan rebel forces moving towards the capital, Tripoli, as it could lead to the toppling of the country's leader, Col. Moammar Gadhafi. This would lead to confidence of a resumption in Libyan oil exports and therefore a negative for Brent crude prices.
Natural gas for September delivery was gaining 1.5% to $3.951 per million British thermal units as anticipation of production-disruptive tropical storms offset a bearish storage report.
"We still have a good deal of tropical activity concentrated in the eastern Atlantic, and we could see it be elevated to major cyclonic threats over the weekend," said Cameron Hanover analysts.
Energy stocks were trading mixed.
was rising 1.2% to $88.65;
was sliding 0.5% to $97.43;
was slumping 1.2% to $4.90;
( BEXP) was tumbling 2.5% to $27.36;
was ticking up 0.3% to $29.90;
Kinder Morgan Inc
was losing 0.8% to $24.62; and
Southern Union Company
( SUG) was falling 1% to $41.55.
-- Written by Andrea Tse in New York.
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