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By Samuel R. Avro on Jan 2, 2009 with no responses

Crude Oil Rises Above $46 on Mideast Tension, Russian Gas Cut

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Crude oil options traders on the floor of the New York Mercantile Exchange.

Crude oil options traders on the floor of the New York Mercantile Exchange.

Crude oil futures gained for the second consecutive day as renewed tension in the Middle East heightened worries about a supply cut, and Russia’s decision to cut off gas shipments to Ukraine.

Israeli warplanes renewed their attacks on the seventh day of an operation aimed at halting Hamas rocket fire from Gaza. The prospect of a possible ground operation has many traders worried that the region, the source of one-third of the world’s oil, will become unstable.

Crude oil for February delivery rose $1.53, or 3.5 percent, to $46.13 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices are up 22 percent this week. Oil dropped 54 percent last year, the first annual decline since 2001 when crude slipped 26 percent, and the biggest loss since trading began in 1983.

Russia stopped delivery of natural gas to Ukraine after the failure of last minute talks to reach agreement on a price for 2009. The Russians are now bypassing Ukraine and delivering gas to Europe via Belarus.

According to the median of estimates by 33 analysts surveyed by Bloomberg News, crude oil may rebound this year to average $60 a barrel as the Organization of Petroleum Exporting Countries (OPEC) makes record production cuts