Risk premium rises as oil hovers at $97

London, Dec 28 | Updated: Dec 29 2007, 06:28am hrs
World oil prices held near $97 per barrel today as traders mulled the murder of Pakistani opposition leader Benazir Bhutto, alongside another steep drop in US crude reserves. New Yorks main contract, light sweet crude for February, won 10 cents to $96.72 per barrel on Friday. The contract struck a one-month high of $97.79, which was just 1.50 dollars away from the record $99.29 hit on November 21.

In London, Brent North Sea crude for February delivery added a marginal three cents to $94.81. Yesterday, oil pushed back up towards the all-time highs on the back of a bullish weekly US fuel report and as further geopolitical risk premium was added to the price following the assassination of Pakistani opposition leader Benazir Bhutto, said Sucden analyst Nimit Khamar in London.

Todays trade was fairly flat, with support stemming from geopolitical and stock news, he added. Trade remained thin with many commodity investors away for year-end holiday celebrations. Dealers said Bhuttos killing on Thursday, which plunged the nation into crisis and sparked global condemnation and concern, would have a psychological impact on the market even though the country is not an oil producer.

There would be very serious impact as ramifications of the violence in Pakistana key US ally in the war on terrorplay out, said Steve Rowles, an analyst with CFC Seymour securities in Hong Kong.