Oil rockets over $102 as frigid weather, Mideast spark rally

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Oil surged on Tuesday, sending U.S. crude to its highest in more than four months as a weaker dollar, cold weather in the United States and renewed concern about threats to supply in the Middle East and Africa sparked a buying spree.

Stirring supply worries, Libya's output fell, South Sudanese rebels said they seized control of an oil-producing state capital and expectations of a breakthrough in Iran's nuclear talks with world powers were dampened by both sides.

Brent crude was up more than $1 above $110, its highest since Jan. 2. U.S. crude shot up by $2.13 to close at $102.43, its highest point since Oct. 18. There was no settlement on Monday as U.S. markets were shut for the Presidents Day holiday.

The supply disruptions supported Brent in particular. Libyan production was just 375,000 barrels per day as protests disrupted flows from a large oilfield, El Sharara, the state oil company said on Tuesday. On Sunday, output was 390,000 bpd.

Compounding supply concerns, South Sudanese rebels said they had seized control of the capital of oil-producing Upper Nile state, Malakal, on Tuesday. Oil also drew support last week from an International Energy Agency report showing that inventories in the developed world had posted their steepest quarterly decline since 1999 in the last three months of 2013. Reports on U.S. oil inventories will be released later this week.

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