LONDON (AFP) - Oil prices stabilised after sharp falls sparked by an easing of supply worries, drawing support from worries over the critical condition of Palestinian leader Yasser Arafat.
New York`s main oil contract, light sweet crude for delivery in December, rose by 10 cents to 48.92 dollars a barrel in electronic trading.
The contract tumbled by over two dollars a barrel on Thursday to a six-week low as traders` relief at a sharp rise in US crude inventories finally overwhelmed a rally sparked by the re-election of US President George W. Bush.
In London, the price of Brent North Sea crude oil for December delivery fell Friday by nine cents to 45.92 dollars a barrel on thin volumes in electronic deals.
"Arafat`s ill health is adding tension and underpinning prices ahead of the weekend," said Informa Global Markets analyst Peter Luxton.
Dealers were wary after the Palestinian authority and Israeli government stepped up security and made preparations to prevent a descent into anarchy in the event of the veteran leader`s death.
A spokeswoman for Arafat, Leila Shahid, denied that he was brain-dead, but said that the 75-year-old was "between life and death" and in a reversible coma in his hospital near Paris.
"He could wake up, but he could not wake up," said Shahid, speaking to the private French radio station RTL.
Fears of a winter supply crunch in the United States have eased after the US Energy Department reported Wednesday that crude oil inventories rose 6.3 million barrels to 289.7 million barrels in the week to October 29.
However, markets remain concerned about the low levels of US stockpiles of distillates -- mostly crucial heating oil and diesel.
Distillates dropped 900,000 barrels to 115.7 million, below the average range for this time of year, the US Energy Department said.
A "strong natural gas build in the US has continued the recent trend of strong US crude inventory data, which has caused oil prices to skid lower", said Luxton.
Brent prices have fallen four dollars a barrel this week after the rise in US crude inventories offset the positive influence of Bush`s uncontested electoral victory.
Luxton said the "doomsday scenarios are now dissipating".
He added: "Jitters over a lack of winter heating oil to heat American homes are now disappearing with the strong crude builds."
Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo, said oil prices traditionally go on a downward cycle from end-October to mid-November.
"People want to wait and see what happens in the winter so they don`t want to keep long (bought) positions," he said.
Emori said 48 dollars a barrel was a critical support level, which if breached could see prices falling further in the short term.
11/05/2004 - 12:11 GMT - AFP