(Updates prices)
By Margaret Orgill
LONDON, June 6 (Reuters) - Oil rose by more than $3 a barrel
to above $131 on Friday, bringing gains in the last two days
to $9 as the dollar weakened further on a jump in the jobless
rate in the United States [].
Comments from Israel's transport minister that an attack on
Iranian nuclear sites looked "unavoidable" given the apparent
failure of sanctions to deny Tehran technology with bomb-making
potential also helped drive prices higher.
This was the most explicit threat yet against Iran from
Prime Minister Ehud Olmert's government. []
U.S. light crude for July delivery <CLc1> was up $3.23 at
$131.02 a barrel by 1230 GMT.
Oil surged $6 in after-hours trading on Thursday in the
U.S., erasing two days of sharp losses triggered by worries that
high oil prices were starting to dent demand.
Crude hit a record high of $135 last month.
London Brent crude <LCOc1> rose $2.72 cents to $130.26.
The remarks from the Israeli government gave added momentum
to the rally, said Olivier Jakob of analysts Petromatrix.
"Financial money is flowing back into oil and commodities,"
said Jakob. "When the market is in such a strong rally, there is
a tendency to read the bullish headlines rather than the bearish
ones."
The dollar weakened further against the euro on Friday,
having fallen by more than 1 percent on Thursday after European
Central Bank President Jean-Claude Trichet said a number of
policymakers wanted higher interest rates and a hike was
possible as soon as next month. []
Investors have used oil and other commodities as a hedge
against the weaker dollar and inflation as the housing crisis
and high fuel prices batter the U.S. economy.
DEMAND
The sharp reversal in the dollar put longer-term worries
about weakening oil demand on the backburner, after they were
rekindled earlier this week when India and Malaysia decided to
raise domestic fuel prices to cope with bulging subsidy bills.
The International Energy Agency (IEA), an adviser to 27
industrialised countries, issues its latest forecasts next week
and has said it may lower its 2008 demand growth projection
further, after having already more than halved it to 1.03
million barrels per day (bpd).
But some analysts say subsidy cuts in Asia will not be
enough to slow oil use.
"World oil demand growth is still accounted mostly by China,
the Middle East and Latin America -- and through the summer,
there is no reason to expect a material slowdown in demand
growth in these areas," said Harry Tchilinguirian, oil analyst
at BNP Paribas in London.
Ahead of a weekend meeting of G8 energy ministers plus their
peers from China, India and South Korea, to try and agree on the
role of consumer nations in stemming oil's five-year price
rally, the IEA warned that oil demand would rise by 70 percent
if governments continued with current policies.
It also urged world governments to start a $45 trillion
dollar "energy technology revolution" or risk a 130 percent
surge in carbon emissions by 2050. []
(Additional reporting by Santosh Menon in London and Maryelle
Demongeot in Singapore; editing by William Hardy)
