Oil rises as weather concerns stem slide

Enlarge Photo Droplets of oil fall from a pump after a station attendant filled up a vehicle... Slideshow: Day in pictures: June 19 08

Fri, Jul 18 11:34 PM

NEW YORK (Reuters) - Oil rose on Friday, stemming a 12 percent fall from last week's record high, on threats a developing Caribbean weather system could hit the energy-rich Gulf of Mexico.

A low-pressure system northwest of Aruba was showing high potential for strengthening into a tropical depression and could reach the northern Gulf of Mexico, which contains a high concentration of oil and natural gas facilities, in about five days, according to weather models.

U.S. crude gained 14 cents to trade at $129.43 a barrel by 1:50 p.m. EDT, (1750 GMT), after hitting a six-week low of $128.54 earlier, the lowest since early June. London Brent crude fell 7 cents to $131.00 barrel.

Growing concerns about the flagging U.S. economy and falling demand this week knocked oil off record highs over $147 a barrel struck last Friday.

"(Crude is being) buffeted by weather concerns on the one hand and the potential for an improvement in the nuclear standoff with Iran," said Addison Armstrong, director of market research for Tradition Energy.

The United States plans to send an envoy to Geneva to join nuclear talks with Iran for the first time, to underline its commitment to a diplomatic solution to the impasse over Tehran's nuclear program.

Iranian Foreign Minister Manouchehr Mottaki said on Friday he saw almost no possibility of Israel or the United States attacking his country over the program, which has supported prices by raising concerns of a potential oil supply disruption from the OPEC nation.

A five-day national oil workers strike that had limited effect on output from Brazil's state-run energy company Petrobras will end at midnight Friday, but more walkouts loom on the horizon. Workers will meet on July 25 to discuss their next move.

Local residents blew up a Nigerian oil pipeline operated by Italy's Eni in the restive Niger Delta, cutting output further in the world's eighth largest oil exporter.

Attacks by militants in the OPEC nation have helped support gains that have added 30 percent to crude prices this year. Rising demand from emerging economies in Asia helped send oil on a six-year rally that has sent prices up sixfold.

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