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Oil prices rise ahead of weekend, US oil stabilises

Oil prices rose on Friday (25 July), with the New York contract stabilising, as traders braced for a weekend that could see escalating geopolitical tensions in Ukraine and the Middle East.

NEW YORK: Oil prices rose on Friday (25 July), with the New York contract stabilising, as traders braced for a weekend that could see escalating geopolitical tensions in Ukraine and the Middle East.

The US benchmark futures contract, West Texas Intermediate (WTI) for September, edged up two cents to US$102.09 a barrel.

In London, Brent North Sea crude for delivery in September settled at US$108.39 a barrel, leaping US$1.32 from Thursday's closing level.

Traders were making some "readjustment" to the WTI price after it fell by US$1.05 on Thursday, said Bob Yawger of Mizuho Securities.

On Wednesday, the US contract gained 73 cents after a report by the US Energy Information Administration said US crude inventories tumbled by four million barrels in the week ending July 18, the fourth consecutive weekly decline and far larger than expected.

The report also showed US gasoline inventories rose 3.38 million barrels, even though many Americans are taking to the road for their holidays in the peak-demand summer driving season. Rising supplies tend to indicate weak demand in the United States, which is the world's top crude oil consuming nation.

"WTI prices are kept pressured under by gasoline inventories, which expanded for the third straight week despite the ongoing driving season in the US," said CMC Markets analyst Desmond Chua.

Tim Evans of Citi Futures cited a possible "concern that violence in Libya or Iraq could flare over the weekend" as a reason for the price action.

Brent, traded in London, typically tends to react more dramatically to international risks than WTI, which responds mostly to supply and demand in the United States.

"No agreement was reached for a cease-fire in Gaza, and Ukraine-Russia tensions show no signs of abating," said BMO Capital Markets in a research note.

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