Oil Sets Record Close of Nearly $96 On Supply Worries

US crude oil futures ended at a record close of almost $96 on Friday as robust domestic jobs data reassured investors that the current credit crunch had not affected the wider economy.

Oil Pipeline
Oil Pipeline

Crude's rebound from a dollar loss on Thursday was supported by a rally in heating oil and gasoline futures.

Traders cited some refinery problems in Europe and forecast for the first blast of cold air moving into the U.S. Northeast, the world's biggest consumer of heating oil.

U.S. heating oil futures posted a record high and RBOB gasoline futures were the strongest percentage leader in the oil futures complex.

"Today's rebound is a continuation of the major bull trend, said Andy Lebow, broker at MF Global in New York. "The rally is being fueled by a weak dollar and U.S. economic data in the past two days that shows strength in the third quarter, though concerns are there for the upcoming fourth quarter and the first quarter of next year," he added.

On the New York Mercantile Exchange, December crude gained $2.44 to settle at a record $95.93 a barrel on the New York Mercantile Exchange, after earlier topping $96 for the second time this week.

The day's rebound, also fueled by pre-weekend short-covering, cut short a slide in prices from a record intraday high of $96.24 notched early on Thursday.

In London, December Brent crude was up $2.20, or 2.4 percent at $91.92 a barrel, trading $89.64 to a record high $92.21.

NYMEX December heating oil was up 5.37 cents, or 2.1 percent, at $2.5660 per gallon, after trading from $2.51 to $2.5746, a record eclipsing the $2.5567 high hit on Thursday.

The U.S. Northeast, the world's largest consumer of heating oil, would see the season's first blast of cold air moving in next week, according to weather forecasters.

London's ICE gas oil futures hit a record high at $800 a ton on Friday.

France has drawn 285,000 tonnes of heating oil from nonstrategic stockpiles following delays in restarting production at France's Gonfreville refinery, an adviser to the French economy minister confirmed Friday.

December RBOB rose 10.18 cents, or 4.3 percent, to $2.4450 a gallon, also the day's high and the highest since April 30's $2.4550.

S&P's decision to raise the weighting of RBOB contracts it tracks was supportive, traders noted.

The S&P GSCI commodities index is raising the weighting of RBOB contracts it tracks to 4.55 percent of the total index in 2008, up from 1.37 percent in 2007, Standard and Poor's said on Friday.

The index was also cutting its weighting of heating oil contracts from 5.76 percent to 4.68 percent.

U.S. employers added a surprisingly strong 166,000 new nonfarm jobs in October, twice as many as economists had forecast, the Labor Department reported.

The dollar dropped to a record low against the euro and a major currency basket on persistent worries about credit and unreported losses at financial firms, which overshadowed the strong U.S. payrolls report.

On Wall Street, financial stocks pushed the Dow industrials and the S&P 500 lower on Friday, on fears the credit crisis may create more problems.

Persistent international tensions, especially in the Middle East, also were supportive to oil futures.