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Oil prices surge with Middle East tensions

Update: February, 24/2012 - 11:44

NEW YORK – World oil prices surged to new nine-month highs on Thursday amid growing tensions over Iran's nuclear programME and the Syrian government's deadly crackdown on the opposition.

New York's main contract, West Texas Intermediate (WTI) light sweet crude for April, jumped $1.55 to settle at $107.83 a barrel. It was its highest close since May 4.

In London, Brent North Sea crude for delivery in April added 72 cents to close at $123.62, a peak last seen on May 2.

Sucden analyst Myrto Sokou said the oil market looked "overbought."

"Geopolitical tensions in Iran and Syria continue to remain the main driver amid the uncertain macroeconomic conditions," Sokou said.

"In addition, there are... reports that Japan will seek to decrease imports of Iranian crude by up to 20 per cent which should only serve to increase energy costs within the country as the world's third-largest crude importer."

The New York contract gained support from data showing rising business confidence in Germany and a slow but steady improvement in US jobless claims.

The weekly US government energy inventories report showed a surprisingly strong jump in crude oil in the world's largest oil-consuming nation, suggesting slowing demand.

"We are having a very strong finish of the day here," said Matt Smith at Summit Energy.

"Even though the inventories were not bullish at all, we have still seen a rally post the report," he said.

"It has more to do with risk appetite," he said, noting the positive German confidence number and another week of US jobless claims trending lower.

The US Department of Energy said that crude stockpiles jumped by 1.6 million barrels last week, more than three times the amount expected by most analysts.

"This (data) is consistent with beliefs that elevated prices are beginning to hurt demand," said GFT Markets analyst David Morrison. AFP

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