Oil prices recover after pre-weekend slump
Oil prices recovered slightly on Monday as investors saw last week's plunge as a perfect buying opportunity, analysts said.
New York's main contract, light sweet crude for delivery in December, gained 56 cents to 85.44 dollars a barrel.
Brent North Sea crude for December rose 76 cents to 87.10 dollars a barrel in London trade.
Crude futures slumped on Friday, after hitting two-year highs the previous day, as traders took their cue from a stronger dollar and speculation over a Chinese interest rate rise.
A stronger dollar makes it more expensive for investors holding other currencies to buy dollar-denominated commodities like crude oil.
In recent weeks, the energy market has been buoyed by a weaker dollar and the prospect of a stronger-than-expected global economic recovery.
"After taking a tumble on Friday, the price of" oil is 'stabilising'," Commerzbank analyst Carsten Fritsch noted on Monday.
"Speculation about further tightening of monetary policy in China and concerns that this could dampen oil demand there is still weighing on prices," he added.
Investors bought up crude after it slid more than three percent on Friday, said Serene Lim, oil and gas analyst for ANZ bank in Singapore.
"I think investors are just taking the opportunity of the sell-down last week to buy .... The fall was actually a good opportunity to buy into the market," she said.
Lim added that crude prices of 90 dollars were possible by year's end.
Major oil producer and exporter Iran said on Sunday that the world economy was in a position to absorb a price of even 100 dollars a barrel.
"Oil prices increasing to 100 dollars would not hurt the global economy," Mohammad Ali Khatibi, Iran's representative at the Organization of Petroleum Exporting Countries (OPEC), told the oil ministry news agency SHANA.
Khatibi added that the current price range of 70 to 90 dollars was a "suitable" range.
"Not only producers, but consumers have reached this agreement that 70 to 90 dollars is a suitable price for oil because it encourages investment and does not hurt the global economy," he said.
His remarks come days after OPEC revised upward its world oil demand growth estimates for 2010 and 2011.
Iran is OPEC's second-largest oil producer and holds around 10 percent of world oil reserves. Last month OPEC members, which together pump 40 percent of the world's crude, elected Iran to the oil body's presidency for next year.
© 2010 AFP