Oil surged into the close of open outcry trading in New York, stoked by colder weather in top consumer the United States and increasing political tension in major producing countries.
Crude for March delivery settled up $1.31 at $59.02 a barrel in New York. For the week oil rose 6.5%, the biggest gain since the week of December 1st and the third weekly gain in a row. In electonic trading oil rallied further, setting a fresh 4-week high of $59.25.
Oil unions in Nigeria, the world's eighth-largest exporter, were considering a strike over increased violence in the oil-producing Niger Delta from militant attacks and kidnappings. Tensions also continued to build between Iran and the United States, which accuses Tehran of interfering in Iraq and seeking to build an atom bomb. The Islamic Republic says its nuclear program is for peaceful purposes.
"The risk-premium is re-emerging into the mix," said Mike Wittner of investment bank Calyon. "There's no question, just following the news flow, there's been a lot more coming out of Iran and Nigeria is simmering away."
Oil is down 5% since the start of the year, but has recovered from a rout sparked by warm winter weather that knocked 18 percent off the price, which sank to $49.90.
Exceptionally mild weather in the U.S. Northeast, the world's largest heating oil market, left ample stocks of heating fuel in the Northeast, the world's largest heating oil market. But belated cold weather has begun to eat into winter fuel stockpiles. Weekly U.S. data Wednesday showed inventories of distillates, which include heating oil, fell more than expected last week.
Forecasters said the coldest weather of the season could hit the U.S. Northeast this weekend. Output cuts from the Organization of the Petroleum Exporting Countries, source of more than a third of the world's oil, have also helped boost prices.
OPEC has pledged to reduce supply by half a million barrels per day (bpd) from Feb. 1 in addition to a 1.2 million-bpd cut that took effect from November.