Oil Above $47 A Barrel

Israel's ground offensive in Gaza and a dispute between Ukraine and Russia over gas imports pushed oil prices above $47 a barrel yesterday, but some analysts say there is more than just unrest in the Middle East behind the rally.

Light, sweet crude for February delivery rose 92 cents to $47.26 a barrel on the New York Mercantile Exchange, after jumping $1.74 on Friday to settle at $46.34.

In London, February Brent crude rose 50 cents to $47.41 a barrel on the ICE Futures exchange.

In other Nymex trading, gasoline futures added 3.55 cents at $1.146 a gallon. Heating oil gained 4.2 cents at $1.5223 a gallon, while natural gas for February delivery fell 6.3 cents to $5.908 per 1,000 cubic feet.

Phil Flynn, an analyst at Alaron Trading Corp. in Chicago, said there seemed to be a mood change in the market and a belief that the economic doom and gloom has hit bottom.

"Would we really be concerned about these geopolitical issues as it relates to oil if we didn't think that the demand was going to improve somewhat in the coming year? Probably not," Flynn said.

Energy consultancy Cameron Hanover said some traders liked to point to violence in the Middle East as a cause of higher oil prices, but the reality was slightly different.

"Any time that prices react by moving higher, in response to violence in the Middle East, particularly in non-oil producing countries like Israel or the Palestinian territories next door, it is a good sign that the market wants to move higher," the firm said in its Daily Energy Hedger report yesterday.

Tensions were high in the Middle East as thousands of Israeli troops, backed by tanks and helicopter gunships, surrounded Gaza's largest city and fought Hamas militants at close range Sunday. The offensive moved from airstrikes to artillery shelling and ground fighting in a bid to stop Hamas rocket fire on southern Israel.

An Iranian Revolutionary Guard commander yesterday urged Islamic nations to use crude oil as a weapon to exert pressure on Western backers of Israel.

Russian gas monopoly Gazprom has cut off gas shipments to Ukraine since Thursday in a dispute over payments, and Ukraine has warned that European customers could see serious natural gas disruptions in about two weeks. — Associated Press