Oil prices edge up again after dropping on signs reserves may be released

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Oil prices edged up slightly on Saturday after diving more than US$2 a barrel the previous day on signs that the US and other countries could soon release some emergency reserves to keep prices from rising.

Benchmark oil for May delivery rose US24c to finish at US$103.02 a barrel on the New York Mercantile Exchange. That is about 4 per cent lower than the beginning of last month, when it was close to US$109 a barrel. The US benchmark has risen about 38 per cent from about US$75 a barrel in October and is up 4 per cent since the start of the year.

In London, Brent crude for May delivery rose US49c to settle at US$122.88 a barrel on the ICE Futures exchange.

Oil has jumped because of concerns that global supplies could become tighter due to tensions over Iran's nuclear programme.

The US and other countries are concerned that Iran, the world's third-largest oil exporter, is building a nuclear weapon. Iran has denied it, but won't let international inspectors take a closer look at its nuclear facilities.

President Barack Obama is moving ahead with tough sanctions aimed at squeezing Iran's oil exports, after he determined that there is enough crude on world markets to take that step without harming US allies.

US sanctions on foreign banks that continue to purchase oil from Iran take effect in June. The aim is to cut off Iran's central bank, which processes almost all of the country's oil business.

Other countries are trying to cut off Iran's oil revenue through a variety of sanctions and an embargo.

The US, France and other nations are also considering a release of some emergency oil supplies to cool rising oil prices.

Most analysts agree that releasing oil from the US Strategic Petroleum Reserve would be at best a temporary cap on oil prices.

Some analysts expect crude has peaked for the year as slower global economic growth undermines demand.

- AP