May 13, 2011 / 5:44 AM / 8 years ago

Oil rises in late short covering, ends week higher

NEW YORK (Reuters) - Oil rose on Friday in late short-covering, ending the week higher after a volatile session whipsawed by European economic concerns and news Libyan leader Libyan leader Muammar Gaddafi may have been wounded.

Traders work in the crude oil and natural gas options pit on the floor of the New York Mercantile Exchange in New York, April 25, 2011. REUTERS/Shannon Stapleton

Trade volumes slowed after a week of heavy activity that saw big swings of more than $11 a barrel between the highs and lows.

Brent crude ended up nearly $5 on the week, after dropping $16 last week as the market digested a wide range of factors fogging the supply and demand outlook, including the death of Osama bin Laden, the impact of high fuel prices, euro zone debt worries and consumer nation monetary policy.

Buyers came in late Friday ahead of the weekend after gains in the dollar sent prices down just before midday in New York.

“Crude prices rose near the close on short-covering ahead of the weekend,” said Tom Knight, senior trader of Truman Arnold in Texarkana, Texas.

Brent crude rose 85 cents to settle at $113.83 a barrel after hitting as high as $114.92 earlier. U.S. crude traded up 68 cents to $99.65 a barrel.

Volumes eased compared with the strong trade seen over the last week, but were close to the 30-day moving average near the close.

Oil came under pressure after comments from Italian Foreign Minister Franco Frattini that Gaddafi had likely been wounded and left the capital Tripoli. Libyan state television later carried brief audio remarks in which he taunted NATO and said he was in a place they could not reach.

Conflict in the OPEC nation has slashed exports, helping send prices this year to peaks not seen since 2008. Many experts expect the country’s output could be reduced for most of this year.

EARLY STRENGTH

Oil prices got an early boost as strong economic data from Germany and France pushed first-quarter growth in the euro zone well above forecasts, boosting the euro against the dollar.

The dollar rebounded later, as investors refocused on euro zone debt issues ahead of meetings by finance officials in Brussels, helping to lift crude prices.

A meeting of Eurogroup finance ministers, followed by an Ecofin meeting of EU finance ministers on Monday, could provide further direction to the single currency and the euro is likely to remain pressured until at least after investors digest any outcome.

Early support also came from news China will stop exporting diesel to conserve supplies ahead of a looming summer power crunch, signaling the world’s top energy user may need net imports to cover surging demand.

Markets were watching rising waters on the Mississippi, where the U.S. Army Corps of Engineers plans to open a spillway to divert floodwaters ways from Louisiana refineries. Operations at Alon’s small Krotz Spring, Louisiana refinery will be impacted by the diversion — which could be done as early as Saturday, however.

Reporting by Matthew Robinson and Gene Ramos; Christopher Johnson in London; Manash Goswami and Randy Fabi in Singapore; Editing by David Gregorio

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