Oil edges up above $71

Oil prices edged up above $71 a barrel on Monday as central bankers injected cash into jittery financial markets and on expectations of robust energy demand. US crude for September delivery rose 22 cents to $71.69 a barrel, after ending 12 cents down on Friday. London's Brent crude rose 4 cents to $70.43, adding to the previous session's 18-cent gains.
Central bankers by late on Friday had restored an uneasy calm by injecting a massive and unprecedented $323 billion into money markets that had almost seized up in panic over exposure to complex credit derivatives linked to defaulting US mortgages.
"The market is still nervous, but after the sharp drop since a record high there's been some short-covering," said Ken Hasegawa of Himiwari CX. "I think funds will continue to liquidate long positions so the upside is limited." Forecasts that oil demand will remain strong have helped to put a floor under oil prices.
The International Energy Agency said on Friday world oil demands will grew at a faster pace in 2008 than this year and repeated its call for more Opec oil. Demand from the world's second largest consumer China also remains strong, with July imports of crude surging 39 percent versus a year ago.
Geopolitical tensions in oil producing countries remain supportive. Opec producer Nigeria saw gang fighting in the Oil City of Port Harcourt last week. In Iraq, where exports have also been reduced by attacks on dilapidated infrastructure, Prime Minister NUR al-Malice said on Sunday a summit to try to end political deadlock among the country's leaders could begin in the next two days.
Prices have still lost over 9 percent since a record high of $78.77 on August 1, on worries about a possible slowing in the US economy, the debt market squeeze and falling stock prices, shaking out speculative length built up during July's rally.
"Short-term and long-term anxieties stemming from the turbulence in global financial markets will continue to exert some dampening impacts on prices," said PFC Energy. "A protracted credit crunch would undoubtedly weaken growth prospects."
Speculators on the New York Mercantile Exchange crude oil market trimmed net long positions in the week to August 7, from a record level the previous week, the Commodity Futures Trading Commission said on Friday.