Oil prices edge up to near $102 a barrel

Oil prices pushed up by worries over European debt crisis. But some analysts see oil prices declining on slowing world growth and seasonal falloff.

Hasan Jamali/AP
Oil pumps work at sunset earlier this month in the desert oil fields of Sakhir, Bahrain, in the Persian Gulf. Oil prices on Jan. 9, 2012, hovered around $102 a barrel as worries grew about Europe's ability to find a solution to its debt crisis.

Oil prices hovered below $102 a barrel Monday in Asia amid investor concern that a meeting between the leaders of Germany and France won't yield a plan that will keep Europe from recession this year.

Benchmark crude for February delivery rose 13 cents to $101.69 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 25 cents to settle at $101.56 in New York on Friday.

In London, Brent crude was up 60 cents at $113.66 a barrel on the ICE Futures exchange.

Crude traded above $100 last week amid growing trader concern that tension between Iran and Western powers could disrupt Middle East oil supplies. However, some analysts expect a slowing global economy led by a likely recession in Europe will help pull down oil prices.

"The deterioration in fundamentals should accelerate as we move into seasonally weaker demand in the months ahead," Morgan Stanley said in a report. "If Mideast tensions recede, the risk premium built into crude is likely to fade, sending prices lower."

German Chancellor Angela Merkel and French President Nicolas Sarkozy are scheduled to meet later Monday to discuss fiscal coordination within the eurozone and plans to boost the continent's flagging economy.

An Iranian newspaper on Sunday quoted a senior commander in Iran's Revolutionary Guard saying that Tehran's leadership has decided to order the closure of the key Strait of Hormuz at the mouth of the Persian Gulf if the country's oil exports are undermined by U.S. or European sanctions.

The U.S. has recently enacted new sanctions targeting Iran's central bank and its ability to sell petroleum abroad over Tehran's nuclear program. Washington says Tehran is trying to develop weapons, while Iran denies the charges.

Closure of the strait "has a very, very low chance of happening," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "If Iran cut the strait, its own oil wouldn't get to market and it wouldn't get oilrevenue. I consider that a war of words, sabre-rattling."

In other Nymex trading, heating oil gained 1.7 cents at $3.09 per gallon and gasoline futures added 1.1 cents at $2.76 per gallon. Natural gas futures were down 3.8 cents to $3.02 per 1,000 cubic feet.

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