NEW YORK – Oil jumped over $1.50 on Friday to fresh two-month highs above $64 a barrel as instability in the Middle East and other key oil-producing regions sparked supply concerns.
U.S. February light crude climbed $1.51 to $64.30 a barrel on the New York Mercantile Exchange, the highest level since mid-October.
Friday's gains extended a rise of more than $5 since late last week as investors poured fresh money into market to capitalize on the strength of commodities. London Brent crude rose $1.79 at $62.92 a barrel.
Analysts said recent events in West Africa and the Middle East underlined concerns about the security of supplies from developing countries, which control a large share of the world's energy resources.
"This just rams home how much the Western world is dependent upon the 'Wild West' for its energy supplies, whether its West Africa or the Middle East or Russia," said Ian Henderson at JP Morgan Fleming in London.
Recent weeks have seen attacks on Nigeria's oil pipelines, a Russia-Ukraine row over natural gas prices that briefly cut European supplies, and closure of Iraq's biggest refinery due to security threats.
Israeli Prime Minister Ariel Sharon's life-threatening stroke this week and growing concerns about Iran's nuclear intentions have also kept the market on edge.
"There has been a marked ratcheting up of geopolitical tensions this week," said Kevin Norrish, an oil analyst at Barclays Capital.
However, gains were seen limited after an increase in U.S. distillate and natural gas stocks last week.
Analysts pointed to warmer temperatures across most of the country as reasons for the distillate build and the jump of 1 billion cubic feet in stocks of natural gas — a key utility fuel in the U.S. Northeast and Midwest.
Distillate demand slid 10 percent last week on the milder weather, U.S. government data released Thursday showed. Crude stocks fell by a less-than-expected 1 million barrels.
U.S. Treasury Secretary John Snow said in a television interview that U.S. oil and gas inventory levels were "fairly encouraging," but high energy prices remained a concern.