Oil prices surge another 6% to over $45 a barrel

August 31 02:32 2015

Crude oil prices rallied for the second straight day on Friday as a conflict in Yemen raised fears of supply constraints in the Middle East. Benchmarks gain despite stocks’ scary weekWest Texas Intermediate futures rose $2.66, or 6%, to settle at $45.22, a barrel after surging 10% on Thursday, capping the biggest weekly gain six years.http://www.dreamstime.com/royalty-free-stock-photos-oil-pump-image17680658

Besides the strife in Yemen, concerns about tropical storm Erika, which could be headed toward the U.S. Gulf Coast, also could be fueling the price jump. The oil industry “has yet to feel the full impact of capital spending cuts and project cancellations that will provide a tighter market of oil in the future when the global economy comes back,” senior energy analyst Phil Flynn of the Oil Price Futures Group wrote in a note to clients.

On Thursday, the government said the U.S. economy grew by 3.7% in the second quarter, up from its previous estimate of 2.3% and more than economists expected. That raised the prospect of stronger energy demand in the US, Despite a volatile week of extreme swings, the Dow Jones industrial average actually rose 1.1% for the week, prompting oil traders to turn more bullish on global consumption. A rally in Chinese stocks also eased fears of plunging demand in that country.

Meanwhile, Royal Dutch Shell has shut down two African pipelines to make repairs, drawing supplies off the global market. And a US Energy Department’s report showed a 5.5 million barrel drop in crude supplies last week. “Oil prices are out of the crisis zone,” Flynn wrote Thursday.