Oil prices spiked above $62 a barrel Friday and gasoline futures continued to surge as unrest in the Middle East and Nigeria helped vault crude prices to their highest level since December.
Light, sweet crude for May delivery gained 59 cents to settle at $62.28 on the New York Mercantile Exchange, after earlier climbing as high as $62.65. The rise follows a surge of more than $2 on Thursday, after U.S. government figures showed refineries are boosting crude usage to make gasoline and other products.
The May contract for Brent crude added 67 cents to $63.18 a barrel on London's ICE Futures exchange.
"There's a good solid list of fundamental supports for the market," said Citigroup Global Markets energy analyst Tim Evans. "There's nothing on the other side of the scale,"
At the top of the list was Britain's Ministry of Defense saying Iranian naval vessels seized 15 British sailors and marines in Iraqi waters. Britain said the personnel were "engaged in routine boarding operations of merchant shipping in Iraqi territorial waters," and had completed their inspection of a merchant ship when they were accosted by Iranian vessels.
FIND MORE STORIES IN: Iraq | Iran | Britain | Nigeria | Militants
Also adding to the market's worries was gunmen kidnapping three foreigners in southern Nigeria, Africa's biggest oil producer. Police said unidentified assailants waylaid a vehicle carrying an Indian and a Lebanese man in Warri and kidnapped them. In a separate incident, authorities said gunmen stormed a German construction firm in the main southern oil city of Port Harcourt and kidnapped a Dutch employee.
More than 150 foreign workers have been seized in the Niger Delta during a year of stepped-up militant attacks and rising crime. Militants say they are fighting to force the federal government to give more oil revenues to their region and release two leaders on trial for treason or corruption charges.
The focus back on geopolitical factors came after a U.S. inventory report indicated earlier this week that refineries are beginning to emerge from their seasonal maintenance period, after weeks of declining utilization, and will soon start demanding more crude oil ahead of the U.S. driving season.
The Energy Information Administration reported refineries operated at 86.3% capacity last week, up 0.7% from the prior week. Gasoline inventories, meanwhile, dropped 3.4 million barrels last week to 210.5 million barrels.
"The best part for the bulls is that the steadily increasing demand for crude takes weeks to be turned into a rising tide of refinery output," Cameron Hanover's Peter Beutel wrote in a research note. That means crude oil bought Thursday won't leave the refinery gate as a finished product until May or June.
"If we do not see a steadily rising stream of imports, domestic refinery output cannot meet the demand we see in July and August," Beutel wrote.
Gasoline futures rose more than 4 cents to settle at $1.9983 per gallon on the Nymex, after setting a fresh seven-month high Thursday.
Prices at the pump have risen recently as well, with a gallon of unleaded gas averaging $2.577 across the country, according to AAA and Oil Price Information Service. That's up from $2.278 a month ago and $2.511 a year ago.
In other Nymex trading, natural gas futures fell 5.1 cents to $7.269 per 1,000 cubic feet, and heating oil futures slipped less than a penny to $1.7111 a gallon.
Copyright 2007 The Associated Press. All rights reserved.
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