By CHRIS KAHN, Associated Press
NEW YORK (AP) — The price of oil climbed Friday for a third straight day as traders fretted about declines in supply in key areas around the world.
A series of reports this week showed that oil supplies from Iran, the North Sea and the U.S. have declined. Continued decreases would likely squeeze global supplies, while demand is expected to rise to a record of about 90 million barrels per day this year.
Benchmark U.S. crude rose by $1.02 to finish at $87.10 per barrel in New York, while Brent crude increased by 35 cents per barrel to $101.42 per barrel in London.
Barclay's analyst Paul Horsnell outlined the supply concerns in a research note on Friday.
—The U.S.: America's oil supplies swelled in June to 22-year highs. They've declined since then, including a surprising 4.7 million barrel drop last week. Supplies are falling as demand started to rise again in the U.S., driven by increased consumption of diesel and jet fuel. Refineries also have cranked up production of gasoline and other fuels to the highest level since September 2006.
—North Sea: Europe gets more than 2 million barrels of oil per day from Norway's wells in the North Sea. A strike by offshore oil workers slowed that production for weeks before the government forced a settlement. By the time it ended this week, the strike cut oil production by about 5 million barrels, Horsnell said. That will tighten European supplies just as it enforces an embargo of Iranian crude.
—Iran: Horsnell estimated that the European embargo has cut Iran's exports by half to 1 million barrels per day or less. The embargo is part of a broader effort by Western nations to force Iran to scale back its nuclear program. Iran's leaders have threatened to block a crucial Persian Gulf oil route in response to the sanctions.
As the embargo continues, "Iranian output and exports may well fall faster than markets are currently pricing," Horsnell said.
Iran continued to spar with the West over its nuclear program on Friday. State-run media reported that recent military exercises in Iran showed that its military has improved the accuracy and firing capabilities of its missiles. The reports, which confirmed a Pentagon assessment last month, followed new U.S. sanctions announced Thursday.
Oil prices had lacked a clear direction because of concerns about the global economy. The U.S. isn't adding enough jobs and Europe appears headed for another recession. China's burgeoning economy cooled off.
But on Friday, a report out of China soothed everyone's nerves. The world's second-largest economy is still growing, albeit at the slowest pace since 2009. The 7.6 percent growth rate was in line with analysts' expectations.
"We're breathing a sigh of relief here," independent analyst Jim Ritterbusch said. "The market was looking for some bad numbers."
As China's economy slows, analysts said the U.S. and other countries will likely pursue new measures to spark growth.
Meanwhile, U.S. retail gasoline prices rose less than a penny to a national average of $3.388 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has risen by about 3 cents in the past week, though it's still 55 cents cheaper than its peak price in April.
In other futures trading, heating oil rose by 1.49 cents to end at $2.7882 per gallon and wholesale gas added a penny to finish at $2.8161 per gallon. Natural gas was unchanged, ending the week at $2.874 per 1,000 cubic feet.
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