Oil rises to fresh 9-month high above $108 in Asia

[February 24, 2012]  SINGAPORE (AP) -- Oil prices rose to a fresh nine-month high above $108 a barrel Friday in Asia amid signs the U.S. economy is improving against a backdrop of elevated tensions in the Middle East over Iran's nuclear program.

Benchmark crude for April delivery was up 59 cents to $108.42 per barrel late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.55 to settle at $107.83 in New York on Thursday.

Brent crude was up 55 cents at $124.17 per barrel in London.

The government said Thursday that the number of people seeking unemployment benefits last week was unchanged and that the four-week average was the lowest in four years.

Traders brushed off evidence that crude demand in the U.S. remains weak. The Energy Department's Energy Information Administration said Thursday crude inventories rose 1.6 million barrels last week and that oil demand has dropped 6.7 percent from a year ago.

"The ability of crude to post new highs in the face of what appeared to be a bearish EIA report attests to the underlying strength of this price advance," energy trader and consultant Ritterbusch and Associates said in a report. "The oil market has evolved into somewhat of a self perpetuating cycle in which new highs beget new buying that forces new highs."

Crude has jumped from $96 earlier this month amid growing tension over Iran's nuclear program and fears global crude supplies could be disrupted. Some analysts expect economic sanctions by the U.S. and Europe and countermeasures by Iran will help keep crude prices elevated this year.

"There is a relatively high and growing probability to a scenario in which there is no resolution in 2012, in which oil prices grind higher along with a gradual escalation of tension," Barclays Capital said in a report.

In other energy trading, heating oil fell 0.5 cent to $3.29 per gallon and gasoline futures were steady at $3.29 per gallon. Natural gas fell 0.2 cent to $2.62 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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