Oil back above $113 on Turkish raids

Oil rebounded above $113 a barrel today after three straight days of falls

Oil rebounded above $113 a barrel today after three straight days of falls, as concerns about fresh Turkish assaults in northern Iraq outweighed easing worries about supplies and a firmer US dollar.

Turkish warplanes launched intensive bombing raids on Kurdish rebels in northern Iraq overnight, but there were no reports about casualties or any impact on oil output from the region. Previous Turkish raids into the territory have sent oil prices higher.

US light crude for June delivery rose 58 cents to $113.10 barrel by 11.27am, recovering from session lows of $111.78. London Brent crude was 78 cents higher at $111.28.

Oil had steadily fallen since hitting a record high of $119.93 on Monday, tracking a recovery in the dollar and as demand in No.1 consumer, the US, wanes on the back of surging fuel costs and wider economic woes.

The dollar hit a two-month high against the yen after US economic data reinforced expectations the Federal Reserve will keep interest rates on hold for a while. Analysts said a strengthening US dollar remains the main downside risk for oil prices, which could fall to as low as $100 should the dollar gain more ground.

The resumption of crude supplies from Nigeria and the North Sea also weighed on prices. Exxon Mobil Corp said it had reached a deal with a Nigerian oil union to end an eight-day strike which had shut down the company's 800 000 barrel-per-day output in Nigeria and that it was resuming production.

In Britain, the main crude processing unit at the Grangemouth refinery resumed production and the diesel-making hydrocracker is due to restart this weekend. - Reuters