Oil prices jump by 6%

Oil prices rose above US$42 a barrel, as Israeli attacks on Gaza fuelled concerns that Middle Eastern geopolitical tensions could disrupt oil supplies from the region. Crude oil futures touched $42.20 a barrel on the New York Mercantile Exchange (NYMEX) yesterday, and $43.18 on London's ICE Futures exchange, before further bleak news about US consumer spending prompted a slight decline. The price movements signified tension between newly emerging supply concerns and the long-running issue of falling oil demand, due to global economic weakening that has weighed heavily on crude prices since they peaked at more than $147 a barrel in July. Low trading volumes due to the Christmas holiday may have exacerbated price volatility yesterday, with prices fluctuating in a $4 range between about $38 and $42 a barrel in the latest NYMEX trading session. Abu Dhabi National Oil Company's announcement on Friday that it would reduce oil supplies to customers by about 15 per cent next month, in line with Opec's Dec 17 decision to cut output by a record 2.2 million barrel per day, sparked a multi-day price rally that now seems to have ended. Stemming crude's rise - its first significant rebound in months - new data showed that deep pre-Christmas price discounts in retail outlets had failed to boost US consumer spending in what would normally have been the busiest time of the year for US shoppers. Total retail sales, excluding cars, during the period from Dec 1 to Dec 24 were 8 per cent lower than a year earlier. tcarlisle@thenational.ae Brent crude was trading at $38.28 in early afternoon trade today; Nymex futures were at $39.43.