Oil futures up on bargain hunting by traders

VIENNA -- Crude oil futures prices rebounded above $48 a barrel in thin trading yesterday on the back of bargain hunting by traders following a drop in prices the previous day.

Still, analysts said that after the volatility of the past few days, sparked by tensions over Iran and a relatively bullish OPEC report, markets would likely settle into a narrow range in the coming days.

On the New York Mercantile Exchange, light sweet crude for March delivery rose 81 cents to settle at $48.35 a barrel on the New York Mercantile Exchange, erasing Thursday's 79 cent decline. March heating oil prices rose 3.65 cents to $1.3493 a gallon on Nymex, which closed early at 1 p.m. ahead of the Presidents Day holiday in the United States.

Prices had surged following a prediction from the Organization of Petroleum Exporting Countries that daily global demand would rise to 83.8 million barrels this year, a 5 percent increase on the group's estimate last month.

Separately, an explosion in Iran briefly spiked oil prices on Wednesday, reflecting traders' jitters about the possibility of attack.

OPEC acting Secretary-General Adnan Shihab Eldin has said the group may cut up to 1 million barrels a day. But Nigeria and fellow OPEC member Algeria have suggested no major reductions are needed.

According to the US Energy Information Administration, oil demand in the United States averaged nearly 21.1 million barrels per day over the last month, 3 percent above last year's level.