Updated from 12:16 p.m. EDT
Oil futures closed above $70 a barrel Friday, as bulls emerged following a sharp two-day selloff caused by improving gasoline supplies.
Light, sweet crude for June delivery rose 25 cents to close at $70.19 a barrel. Oil plunged more than 6% on Wednesday and Thursday and ended yesterday at a three-week low of $69.94 a barrel.
Unleaded gasoline, which often trades in tandem with oil, settled Friday at $2.04 a gallon, up 5 cents.
"This particular bounce
took place without the benefit of supportive fundamental news as there is nothing new to report on either Iran or Nigeria, the chief supply-threat obsessions of the market this year," said Tim Evans, an energy analyst at Citigroup Global Markets in New York.
The gains followed two days of declines triggered by the Energy Department's supply report on Wednesday. Gasoline inventories rose for the first time in two months, swelling by 2.1 million barrels to 202.7 million barrels. Traders have been concerned there wouldn't be enough gasoline for the summer driving season.
OPEC's acting secretary general, Mohammed Barkindo, said crude prices were artificially high because there are plenty of supplies on the world market. Geopolitical problems, new gasoline requirements in the U.S. and a lack of refining capacity have propped up crude futures and added as much as $15 to their prices.
For his part, OPEC is already pumping at full capacity, and would do "everything possible" to drive prices down, Barkindo told
. The cartel, which accounts for 40% of the world's crude, produced 29.5 million barrels per day in March and is on track to hit 38 million barrels by 2010.
Longer-term, growing tension with Iran, the world's fourth-largest crude producer, has prompted traders to bid up energy futures. On Thursday, the U.S., Britain and France circulated a proposed U.N. resolution that demands Iran stop enriching uranium. Iran has countered that it has a right to nuclear power for civilian purposes.
Economic sanctions and even military strikes have been floated as possibilities to halt Iran's nuclear activities. The markets, however, are concerned Iran would strike back and cut its crude exports. In a world marked by razor thin margins of supply, that move would quickly drive up prices.
Violence in Nigeria, where rebels have cut oil production by a quarter, or 500,000 barrels, has also shored up prices.
Royal Dutch Shell
has been most affected by the attacks, with production down 455,000 barrels. The disruptions affect the world crude market especially hard because Nigeria, the fifth-largest U.S. crude supplier, exports crude light in sulfur, which is easier and cheaper to refine.
The gain in crude prices pushed up heating oil futures, even though the weather is mild and heating and demand is low. Heating oil finished trading at $1.95 a gallon, a 2 cent-increase.
High levels of natural gas in storage drove down natural gas futures 13 cents to settle at $6.78 per million British thermal units. There is 31% more natural gas than a year ago and 58% more than the five-year average.
The run-up in crude prices has boosted profits at energy companies, ranging from oil service firms to exploration giants. On Friday,
reported first-quarter earnings more than tripled to $346 million or 49 cents a share, including big gains from derivatives markups. Revenue climbed 41% to $1.53 billion, clearing the analysts' consensus of $1.3 billion.
Reports earlier this week showed that first-quarter profits at Shell jumped 3.1% and 15% at
. Last week,
said its quarterly earnings rose 7%, while
saw profits skyrocket 49% and
booked a 13% increase.