NEW YORK – Crude oil prices jumped to almost $52 a barrel Friday on expectations of high U.S. gasoline demand over the Memorial Day holiday and amid reports Saudi Arabia's King Fahd (search) had fallen ill.
U.S. crude futures settled up 84 cents at $51.85 a barrel, building this week's gains to almost 11 percent. Brent crude gained 54 cents to $50.70 a barrel.
Prices rallied on expectations that higher gasoline demand from summer drivers will start eating away at robust U.S. crude oil stockpiles, running near six-year highs after a flood of foreign imports.
The AAA auto and travel group said in a survey last week a record number of drivers would take to the roads over the coming Memorial Day weekend, the traditional kick-off to the peak summer driving season.
Dealers said worries that Saudi King Fahd's ill-health could lead to instability in the world's biggest oil producer may have added to a late day run-up.
Saudi Arabia declared a state of alert and canceled all leave of its security forces on Friday after the ailing king was taken to hospital, an Interior Ministry official said.
"Any uncertainty in the Kingdom might cause prices to move higher," said Mike Fitzpatrick, vice president for energy risk management at Fimat USA. "We'll have to see how much movement there is if and when the King actually dies."
Analysts have said a recent dip in oil prices below $50 lured fresh fund money, with many players still bullish long-term due to demand growth from Asia and slow increases to world crude production capacity.
This week's rally turned into a surge on Wednesday after a report showing a fall in U.S. crude inventories last week.
"Quite a few longs jumped back into the market that day and may stay that way for quite a while before liquidating," wrote Edward Meir in the Man Energy Daily Report.
Analysts predicted the decline in inventories could be followed by further erosion of U.S. crude stocks over the coming weeks as refineries increase activity.
However, stockpiles of U.S. crude are still near the six-year peak hit earlier this month, bolstered by OPEC (search) oil production that has climbed to a 25-year high.
U.S. gasoline inventories are also at the upper end of the average range for this time of year.
The cartel has been seeking to build global stockpiles ahead of high demand in the fourth quarter.
Most OPEC ministers have so far said they see no need for any change in output policy when the cartel next meets on June 15 in Vienna.