Crude Settles Just Below $43

Crude oil futures rose Monday for the first time in a week, climbing above $43 a barrel after an attack at the U.S. consulate in Saudi Arabia and amid growing concerns that OPEC may try to firm up oil prices after last week's sharp selloff.

Market jitters were compounded by lingering production problems at an oilfield in the North Sea and a protest in Nigeria that shut output on two oil platforms, though combined the snags affected less than 0.5 percent of global daily oil production.

Light crude for January delivery climbed as high as $43.60 per barrel before settling at $42.98, an increase of 44 cents on the New York Mercantile Exchange (search). Oil prices plunged 14 percent last week as government data showed increasing U.S. supplies of crude and heating oil. That touched off a tidal wave of technical and speculative selling, sending oil prices to three-month lows.

Analysts had been expecting to see prices rebound some after the sharp four-day selloff and the catalysts arrived Monday with a deadly attack in Saudi Arabia, the world's largest oil producer, and speculation that the Organization of Petroleum Exporting Countries (search) may informally trim output at its meeting Friday.

But the fact that prices only rose modestly was a sign to some that the market's psychological shift last week could last.

"It's surprising that we're not up even more off of that type of news," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

Islamic militants threw explosives at the gate of the heavily guarded U.S. consulate in Jiddah, then forced their way into the building and held civilians at gunpoint, prompting a gunbattle. Eight people, including five local staff, were reported killed in the three-hour assault.

It was the first major strike by militants inside Saudi Arabia since May, when a total of 29 people were killed in two separate attacks, one at a resort complex in Khobar and another at the Yanbu office of a Houston-based company.

"The attack reminds people that Saudi Arabia is not a secure place," said energy consultant Dan Lippe of Houston-based Petral Worldwide.

However, Lippe added, "a one day bounce is not necessarily a signal that we're going back to the $50 a barrel range."

But the markets are bracing for some price-stabilizing action from OPEC when the group meets Friday in Cairo.

SG Securities in London said that the meeting will be the perfect opportunity for OPEC to raise its average price band for a basket of oils from the official but long-obsolete $22 per barrel to $28 per barrel. This year's runup — the record settlement price for Nymex light crude was $55.17 in October — has left that far behind.

Flynn said he believes the cartel wants to defend prices at current levels and that they may try to do so by reining in members who are producing more than their stated quotas.

In London, Brent for January delivery was up 29 cents to $39.65 on the International Petroleum Exchange.

Heating oil futures (search) were up 1.38 cent at $1.2497 per gallon on the Nymex, while gasoline futures were down less than a penny at $1.1296 per gallon. Natural gas futures rose 12.7 cents to $6.923 per 1,000 cubic feet.

Although oil prices are down sharply from their late October peak, they remain roughly 40 percent higher than a year ago and have been a drag on the global economy, particularly for poor families and energy-hungry industries, such as airlines and chemical manufacturers.

Petroleum prices have been high all year due to strong global demand, a tight supply cushion and fears of output disruptions in Iraq, Nigeria and Russia. In September, a strong hurricane knocked out significant oil production in the Gulf of Mexico, though the region's output is now recovering.

The tight supply of heating oil heading into the Northern Hemisphere is also a top concern nowadays.

Also influencing prices on Monday was news out of Nigeria, where hundreds of job-seeking protesters besieged two oil platforms run by the Royal Dutch/Shell Group of Cos. and ChevronTexaco Corp. in the southern oil region, shutting down 90,000 barrels a day of oil production.

Meantime, Statoil ASA has declined to say when it will resume production at its Snorre A platform in the North Sea after a gas leak last week, resulting in a loss of 205,000 barrels of oil a day in production.