(Updates throughout)
By Bate Felix
LONDON, April 7 (Reuters) - Oil jumped nearly $3 a barrel on
Monday, lifted by a rally in gas oil and optimism that banks
will manage to shore up the financial system helped to fuel
buying across commodities and equities.
A rally in gas oil, the benchmark for heating oil and diesel
in Europe, on concern of tight supply boosted U.S. heating oil
and pushed crude higher, analysts said. Gas oil <LGOc1> hit a
record high of $1,005 a tonne.
"It's the gas oil situation in Europe that's pushing up
NYMEX heating oil," said Tom Knight, a trader at Truman Arnold
in Texas.
U.S. crude <CLc1> rose $2.75 to $108.98 a barrel by 1427 GMT
after leaping $2.40 a barrel on Friday. London Brent crude
<LCOc1> added $2.31 to $107.21.
Adding support, Finnish refiner Neste Oil <NES1V.HE> said on
Monday it sees costs of about 40 million euro ($63 million) in
lost production and repairs from fire at its new diesel
production line in Porvoo.
Neste said the production line would undergo repairs and
maintenance through May but the fire would not have an impact on
Neste's petroleum product deliveries.
Oil prices, which reached an all-time high of $111.80 on
March 17, have come under some pressure from expectations a
slowdown in the United States, the world's biggest energy
consumer, could erode demand.
But speculation the Group of Seven rich nations meeting in
Washington this weekend would help to alleviate credit-related
problems helped to overcome fears of U.S.-led economic weakness
and encouraged buying across a range of assets. []
"At the moment, the market seems to be driven by a positive
momentum and not just one particular reason," said Simon Wardell
of Global Insight.
World stocks hit a fresh one-month high as U.S stocks rose
at the market open on Monday, led by financial shares while
London's FTSE 100 index rose nearly one percent.
"The key driver will be continued financial investors'
inflows into oil," said Societe Generale in a report.
It said $100 had been established as a major support level,
which the market would struggle to break through.
Analysts said fundamentals of supply and demand remained
strong as the Organization of the Petroleum Exporting Countries
(OPEC) shows no sign of increasing output and non-OPEC producers
are struggling to raise supplies.
"The biggest surprises could be on the supply side. Non-OPEC
supply is just not going up this year," Paul Horsnell, oil
analyst at Barclays Capital in London.
News that China, the world's third-largest crude buyer after
the U.S and Japan had agreed to grant hefty tax rebate on crude
imports also helped support the price momentum, an analyst said.
[]
Also, dense fog stopped ships moving in the northern end of
the Houston Ship Channel as it became unsafe for pilots to steer
vessels, the U.S. Coast Guard said. []
(Additional reporting by Jonathan Leff in Singapore and
Maryelle Demongeot, editing by Alex Lawler)
