High oil prices rose further Friday, after the Madrid bombings revived security fears and further strengthened a market boosted by soaring Chinese demand and persistent concerns of a gasoline supply crunch in the United States.
U.S. light crude traded up 27 cents at $37.05 a barrel, after jumping 68 cents in New York Thursday after three days of losses. It touched an intraday peak of $37.19.
London's Brent crude gained 17 cents to $32.98 a barrel.
Bombings in Madrid that rocked the Spanish capital on Thursday, killing 192 people and wounding more than 1,200, had a psychological impact on the oil markets and roiled financial markets.
"It's spooking all the markets. That's what took us over $36.78," said a broker in New York referring to U.S. crude's settlement in New York. U.S. crude opened trade Friday at $36.96.
"After having evaporated in the last few months, the 'terror premium is being factored into the market again," said analyst Phil Flynn of Aaron Trading in Chicago. "This comes at a time when supplies are already tight and any slight disruption or even the fear of disruption could mean a big spike in prices."
The Spanish government said it believed Basque guerrilla group ETA was responsible for the blasts but continued speculation of al Qaeda involvement renewed underlying security concern in the world crude market that relies heavily on Middle East producers.
Global oil demand also remains strong. In its latest monthly report, the International Energy Agency (IEA) raised its forecast for world demand growth this year by 220,000 barrels a day to 1.65 million barrels per day, saying China's soaring economy was driving up consumption faster then expected.
The Paris-based agency, which advises 26 industrialized nations on energy policy, said in a report issued Thursday that consumption would hit 80.2 million barrels per day in 2004, with China providing 580,000 barrels per day of incremental demand.
Worries over auto fuels supply sent U.S. gasoline futures prices up nearly five percent Thursday and extended gains by 0.51 cent at $1.1254 a gallon Friday.
The U.S. Energy Information Administration said on Wednesday that gasoline stocks fell 1.6 million barrels last week and stood five percent below the five-year average, even as crude inventories rose.
Analysts also said the civil unrest in OPEC producer Venezuela continued to haunt the market as it stoked fears of a repeat of the 2002 oil workers strike that disrupted supplies from the world's fifth-largest oil exporter.
"Low U.S. gasoline stocks and trouble brewing in Venezuela have been the main drivers of the recent price strength," said David Thurtell at Commonwealth Bank of Australia.
