Oil Higher On Supply Cuts As Gasoline Demand Rises
NEW YORK, Dec 24 (Reuters) - Brent oil settled at a near a one-month high on Tuesday in thin pre-holiday trade as traders covered short positions amid civil unrest in Africa that curbed global supply while demand for gasoline rose.
Conflict in South Sudan threatened the country's oil output, adding to supply concerns as Libya's production is off by more than 1 million barrels per day (bpd).
U.S. gasoline futures drove the oil complex higher, trading up 1.2 percent, after reaching a 15-week high in the previous session. Refinery snags in the United States and striking refinery workers in France thinned supply while demand remains robust.
"You are running refinery operations at pretty high levels for this time of year," said Bill O'Grady, chief market strategist at Confluence Investment Management in St. Louis. "This shows how increasingly sensitive the market has become to anything less than optimal."
Amid the uncertainty, traders bought back contracts to cover short positions ahead of the Christmas holiday on Wednesday, which drove U.S. and European prices up in light holiday trade.
"There's a rule of thumb; you really don't want to go home short with what's going on," said Rich Ilczyszyn, chief market strategist and founder of iitrader.com LLC in Chicago.
The situation in South Sudan "is going to put a potential crunch on supply in the short term," he said.
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