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LONDON : Oil prices rallied on Friday after three days of heavy falls that pulled the market down by 15 dollars on worries over economic growth and slowing demand, traders said.
New York's main oil contract, light sweet crude for August delivery, won back 2.39 dollars to 131.68.
London's Brent North Sea oil for September delivery rallied 2.38 dollars to 133.35 dollars per barrel.
Over the course of Tuesday, Wednesday and Thursday, New York crude dived by 15 dollars and London Brent almost 13 dollars.
"Prices were up two dollars a barrel, which appears to be a bounce following the recent steep sell off," said analyst Michael Davies at the Sucden brokerage in London.
"There was some bullish news on the supply side, with a strike in Brazil being expanded to impact all production and refining units of the state run Petrobras."
Prices have plummeted since striking record highs above 147 dollars per barrel at the same stage last week.
"What we are seeing is a bounce-back after very sharp falls," agreed David Moore, a Sydney-based commodity strategist with the Commonwealth Bank of Australia.
The oil market has tumbled as traders worried that the slowing US economy would translate into lower demand from the world's biggest energy consumer.
"The recent huge pull back from new record highs above 147 dollars a barrel have come as the economic mess in the US continues, which has hurt current and future forecasted demand for oil," Davies added.
"At the same time there are growing signs that the fall out in the US is impacting the rest of the world, with economic data in Europe, the UK, and Japan worrying and there are even signs of slower growth in India and China, the key demand growth drivers."
Prices fell further this week after an unexpected weekly rise in US oil and gasoline inventories.
US government data showed oil inventories climbed by 3.0 million barrels in the week ending July 11, despite market expectations of a drop of 2.2 million barrels.
Analysts said the surprise rise in reserves indicated record-high oil prices were having an impact on energy demand in a US economy that was already weak.
Developments in the oil-rich Middle East continue to be closely watched after an apparent sudden shift in US diplomatic policy toward Iran announced late Tuesday.
The United States said it was sending Under Secretary of State William Burns to talks on Saturday between Iran's nuclear negotiator, Saeed Jalili, and the European Union's foreign policy chief, Javier Solana.
The United States and other major powers have been locked in a long-running standoff with Iran over its nuclear drive, which they suspect is aimed at making weapons.
Iran has repeatedly refused to heed demands to suspend uranium enrichment, insisting that its activities are exclusively aimed at energy production.
The Islamic republic is the world's fourth-biggest producer of crude oil, and tensions over its nuclear effort helped push prices to record highs recently.
- AFP /ls
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