Oil prices pick up after losses

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World oil prices picked up on Friday after recent heavy losses, finding support from a weaker dollar and rising equities, traders said.

Brent North Sea crude for delivery in March rose 62 cents to $97.20 a barrel in early afternoon London trade.

New York's main contract, light sweet crude for March, gained 44 cents to $90.03.

Prices were "supported slightly by the weaker US dollar and stronger European equity markets," said Sucden Financial energy analyst Myrto Sokou.

"However, it seems that the market sentiment is not as strong as it was two days ago."

European stock markets climbed Friday on bargain-hunting ahead of the weekend as investors set aside a mixed showing in Asia and took heart from news that German business confidence hit record highs this month.

The Ifo institute's closely tracked reading of German business sentiment climbed to 110.3 points in January from 109.8 points in December.

That was an eighth consecutive increase and second straight record high since the country's reunification in 1990.

Oil also won ground on Friday from the weaker dollars, which makes dollar-priced crude cheaper for buyers using stronger currencies. In turn that tends to boost demand and prices.

Despite Friday's gains, the market has fallen over the course of the week after almost reaching $100 a barrel for the first time since October 2008 on the temporary shutdown of the Alaskan pipeline.

The resumption on Monday of oil flowing through the massive Trans-Alaska Pipeline, after more than a week's shutdown following a leak, took pressure off the market. The pipeline carries about a tenth of US crude production.

Prices tumbled further on Thursday, shedding two dollars in New York after news of an unexpected rise in US crude reserves and fears that China would take action to cool its robust economic growth, paring energy demand.

"The recent fundamentals, with large builds in oil inventories and ongoing concerns that China might raise interest rates, triggered long liquidation (selling)," Sokou said.

"Investors might be cautious, as crude oil prices are likely to trade sideways, struggling for some clear direction in the short term."

US crude oil stockpiles climbed 2.6 million barrels to 335.7 million barrels last week. Analysts had forecast a drop of 900,000 barrels in the week to January 14 for the United States, the world's biggest oil consumer.

© 2011 AFP

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