Oil Prices Back Over $70

Crude oil futures prices rose above $70 a barrel Friday after sinking earlier this week on U.S. government data that showed an increase in gasoline supplies.

Light, sweet crude for June delivery on the New York Mercantile Exchange rose 68 cents to $70.62 a barrel in electronic trading by afternoon in Europe. The contract had fallen $2.34 to settle Thursday at $69.94.

Gasoline futures, meanwhile, gained 2.5 cents to $2.0200 per gallon.

On Wednesday, the U.S. Energy Department released a weekly report showing a supply rise as refineries boost output and demand flattens.

Many analysts believe the government data point to a consumer response to U.S. pump prices that exceed $3 a gallon in many parts of the country.

While Nymex oil futures have fallen more than $5 from their intraday peak of $75.35 reached April 21, prices remain roughly 40 percent higher than a year ago and analysts do not expect them to free-fall anytime soon given the high level of geopolitical tensions.

The most pressing source of anxiety in the market stems from the possibility that Iran, a key oil exporter, could cut supplies because of international pressure to modify its nuclear program.

Iran's state-run television reported Friday that the oil ministry took a step toward establishing an oil trading market denominated in euros, rather than the U.S. dollar, by granting a license for the bourse. Trading on oil markets such as New York and London is conducted in dollars.

It wasn't clear who would trade on an Iranian market. Iranian television did not mention trading firms or governments willing to market or purchase products on the bourse, nor did it say when it would open for business.

Iranian legislators earlier this year urged the government to set up the market to reduce the United States' influence over the Islamic republic's economy.

Besides tension over Iran, unrest in Nigeria, violence in Iraq and rising resource nationalism in South America have added to oil market worries.

Some 500,000 barrels per day of Nigerian production, most of it operated by Royal Dutch Shell PLC, remains off-line because of violence there, and more than 300,000 barrels per day remains shut down in the Gulf of Mexico since Hurricane Katrina battered offshore platforms in August.

Strong global demand and a limited supply cushion magnify the significance of these events, while a surge of investors betting on oil and other commodities has also lifted prices.

June Brent on London's ICE Futures exchange gained 89 cents to US$71.18 a barrel.

In other electronic trading involving contracts listed in New York, heating oil prices advanced nearly 2 cents to $1.9570 a gallon and natural gas rose 21 cents to $7.120 per 1,000 cubic feet.