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Crude Ends at $59.80 a Barrel

Another OPEC member pushes for a production cut.

Updated from 11:53 a.m. EST

Crude prices closed higher Friday after Nigerian militants threatened to step up attacks against oil companies and an OPEC minister warned the group's production may be cut.

Light, sweet crude for March delivery rose $1.34, or 2.3%, to settle at $59.80 a barrel on the Nymex. It was the second day oil gained after an OPEC minister suggested the cartel, which controls 40% of the world's oil, should cut production by up to 1 million barrels per day. Crude has reversed course this week and regained 3.7% since Wednesday.

Traders also bought crude to avoid being short over a three-day holiday weekend. The Nymex closed at 1 p.m. Friday and will be shut on Monday for President's Day. Some extra market volatility was also created by the expiration of the crude contract on Tuesday.

Spurred by the rise in oil prices, investors snapped up shares of energy companies Friday, including

Amerada Hess

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, which jumped $3.21, or 2.3%, to $140.30;

Apache

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, which added 24 cents, or 0.3%, to $70.44; and

Valero

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, which rose 75 cents, or 1.4%, to $54.57.

Oil's strength created buying in the rest of the energy complex, with heating oil closing up 3 cents, or 2%, to $1.66 a gallon and unleaded gasoline finishing at $1.49 a gallon, up 5 cents, or 6%.

"The market seems to have found a base to spring from its grossly oversold condition. Even though stockpiles are swelling, the market had descended too far, too fast," said Mike Fitzpatrick, vice president of energy risk management with Fimat USA in New York. "Our thinking is that a bottom has formed for the near term, particularly with the weather shifting to more seasonal readings for the next few days."

Cold weather predictions for the Northeast were also fueling natural gas' rise, with the March contract settling at $7.17 per million British thermal units, a 4-cent increase. Temperatures are expected to fall 20 degrees to the high 20s and low 30s in the Northeast on Saturday, AccuWeather.com, a State College, Pa. weather forecaster said. The cold weather comes on the heels of warming temperatures this week.

The increase in natural gas prices will likely be temporary because the cold snap is not expected to last long and there is a surplus of natural gas. There is 24% more natural gas in storage now than at the same time last year and 44% more than the five-year average.

"Whatever the weather for the remainder of the season brings, we will end the year with record storage levels," said Jim Williams, an energy analyst with WTRG Economics in London, Ark. "It is not in question that they will be high, but rather how high."

A militant leader in Nigeria told the

BBC

that his group, the Movement for the Emancipation of the Niger Delta, had given oil companies until midnight Friday to leave the area. Rebels, eager to share in the country's wealth, have blown up pipelines, kidnapped foreign contract workers, and attacked oil fields, resulting in a 10% reduction in Nigeria's daily oil production.

Nigeria, the fifth largest oil supplier to the U.S., has grown increasingly important to the U.S. as it tries to reduce its dependence on Middle Eastern oil. Nigerian oil is expected to account for 25% of U.S. crude in ten years, up from 15% today.

On Thursday, Rafael Ramirez, Venezuela's energy minister and leader of the country's OPEC delegation, said the group should trim production by 500,000 to 1 million barrels per day at its next meeting on March 8. The group of 11-oil producing countries has kept output at 25-year highs to help countries in the Northern Hemisphere get through the winter.

Russian and Iranian officials are meeting on Monday to discuss a proposal to enrich uranium on Tehran's behalf in Russia. Iran declared in January that it would restart nuclear development activities to produce more electricity for its growing population, and not, as the West believes, to build an atomic bomb. On Feb. 4, the International Energy Agency referred Iran to the U.N. Security Council for possible economic sanctions.