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THE WALL STREET JOURNAL: Crude Oil Reclaims $90 Mark

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By GREGORY MEYER
February 5, 2008; Page C12

Crude oil futures gained to close above $90 a barrel yesterday after traders reconsidered a selloff last week and reacted to fresh violence in Nigeria’s tumultuous, oil-rich southern region.
 
Light, sweet crude for March delivery on the New York Mercantile Exchange settled up $1.06, or 1.2%, to $90.02 a barrel.

Analysts searched for definitive reasons behind the rally. One explanation was that front-month crude’s 3% pullback Friday on the back of economic fears went too far.

“It looks like we were retracing what probably was an overdone selloff on Friday,” said Addison Armstrong, an analyst at TFS Energy Futures in Stamford, Conn. “There’s really a lot of competing news out there right now. I’m not sure why the bulls are holding sway.”

Support for prices came from Nigeria, a major oil exporter that since 2006 has halted more than half a million barrels a day of production amid struggles with rebel groups.

In the latest sign of strife, a spokesman for rebel group Movement for the Emancipation of the Niger Delta, or MEND, yesterday claimed responsibility for a weekend attack on a military houseboat stationed at a Royal Dutch Shell PLC pipeline hub. A firefight left three soldiers and an unknown number of assailants dead, the Associated Press reported, though Shell said production wasn’t affected.

Reports that Turkish warplanes had hit some 70 Kurdish rebel targets inside northern Iraq also unleashed supply jitters. Iraq now produces about 2.5 million barrels of oil a day, or 3%, of world oil supply, some of which is exported through Turkey.

Sustaining a recent reversal of earlier trends, the Nymex April crude contract once again settled higher than the front-month March contract, at $90.07 a barrel, suggesting concerns about immediate supply problems are taking a back seat.

Analysts surveyed by Dow Jones Newswires see U.S. oil stockpiles increasing in weekly data due out tomorrow, which is among the “strong arguments for the downside,” Mr. Armstrong said.

GOLD: Prices fell on long liquidation that began Friday when the metal was unable to take out its record high from earlier in the week. Most-active April gold lost $4.10 to $909.40 an ounce on the Comex division of the Nymex.

COFFEE: Futures surged on ICE Futures U.S. to a 3 1/2-month high as pre-placed buyer orders were uncovered. Support also came from strength in the London market, which reached 10-year highs. ICE March settled 3.60 cents at $1.4270 a pound.

Write to Gregory Meyer at [email protected]

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