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Oil prices rise, but demand worries remain: analyst

business Updated: Jan 08, 2009 08:46 IST

AFP
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Oil prices rose slightly in Asian trade on Thursday after slumping a day earlier in a reflection of underlying weak demand, analysts said.

New York's main futures contract, light sweet crude for February delivery, was up 14 cents to 42.77 dollars a barrel on the New York Mercantile Exchange.

Brent North Sea crude for February delivery gained eight cents to 45.94 dollars a barrel.

"The bleak demand picture is not going away," said Jonathan Kornafel, Asia director of Hudson Capital Energy, a trading firm.

He said recent price rises caused by conflicts in the Gaza Strip and Nigeria, as well as a Russia-Ukraine gas row, could not mask the inherent low demand for oil, which was clearly shown in a substantial stockpile increase in the United States.

The US Department of Energy said Wednesday that stockpiles of crude grew by 6.7 million barrels last week, far higher than analyst predictions of 700,000 barrels.

Kornafel expected oil to trade between 38 and 45 dollars a barrel this week, but said prices could drop "as much as 10 to 12 dollars" if the Israel-Hamas conflict and the Russia-Ukraine gas dispute are resolved.

Oil prices soared in the first half of last year, reaching record highs above 147 dollars a barrel in July, before the global downturn slashed world demand for energy and pulled prices lower.