Oil prices build on previous session's steep rise

Oil prices rose Friday on the previous day's gain of more than US$2 a barrel as new U.S. trade deficit figures spurred hopes that the U.S. economy might escape a serious downturn. Gasoline surged by more than 4 cents.

The March contract opened lower before gaining 99 cents to fetch US$96.45 a barrel by afternoon in European electronic trading on the New York Mercantile Exchange.

Brent crude futures were up 6 cents to US$95.22 a barrel on the ICE Futures exchange in London.

The U.S. Commerce Department said Thursday the trade deficit fell in December and for 2007 as a whole _ an indication the U.S. is exporting more goods. This led investors to think U.S. energy demand would not be as weak as feared.

U.S. Federal Reserve Chairman Ben Bernanke's suggestion that the central bank is prepared to again cut interest rates also helped boost light, sweet crude to settle at US$95.46 a barrel Thursday, an increase of US$2.19 on the New York Mercantile Exchange.

That was its highest close since Jan. 9. The contract has risen in 4 of the past 5 sessions, adding more than US$6 in a little over a week.

"Energy prices are strong," proclaimed the Schork Report, edited by energy analyst Stephen Schork, saying that benchmark crude "despite Bernanke's 'sluggish' view of the U.S. economy appears primed for another run at US$100."

Bernanke said the Fed is ready to act again in response to deteriorating economic conditions. Interest rate cuts support oil prices because they tend to weaken the dollar. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.

Energy investors were also buying after a federal judge's decision Wednesday to confirm an earlier ruling freezing US$300 million (euro205 million) in a bank account owned by the Venezuelan state oil company.

Exxon Mobil is challenging Venezuela's nationalization of an oil project. A British court's earlier decision to temporarily freeze up to US$12 billion (euro8.2 billion) in Venezuelan oil assets drew threats from President Hugo Chavez to cut off all oil sales to the U.S.

Prices gained despite forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, that call for slower demand growth this year due to weakening economies.

That sentiment was echoed by the Organization of Petroleum Exporting Countries. It said Friday that weakening world economic growth and demand prospects and ongoing increases in U.S. and European crude and gasoline inventories may lead it to reduce output in efforts to avoid a steep fall in prices.

In its monthly report, OPEC, responsible for about 40 percent of global oil production, cut its 2008 global oil demand growth forecast by 100,000 barrels a day to 1.2 million barrels a day _ an increase of about 1.4 percent from this year.

OPEC is scheduled to meet March 5 in Vienna to review its production policy.

Heating oil futures were up 1.39 cents to sell for US$2.6805 a gallon (3.8 liters) while gasoline price surged over 4 cents, going for US$2.5179 a gallon.

Natural gas futures were basically flat at US$8.777 per 1,000 cubic feet.