|NEW YORK - Oil prices ended slightly higher Friday as markets took a breather ahead of options trading next week that's expected to trigger a run at $100 a barrel.
Light, sweet crude for December delivery on the New York Mercantile Exchange rose 86 cents to settle at $96.32 a barrel in New York, after hitting an earlier high of $96.65.
On Thursday, the contract fell 91 cents to settle at $95.46 after Federal Reserve Chairman Ben Bernanke said the housing slump and high oil prices, among other factors, will slow economic growth in coming months.
Options on December crude oil futures expire Tuesday, and with investors holding a heap of $100 call options — which allow traders to buy the underlying futures contract at a predetermined price and date — prices could rise further.
Holders of the call options will enjoy a payout if oil hits $100 a barrel, but moderating or falling prices on Monday could send them scrambling to sell to limit their losses.
"It's going to be a prizefight next week between the bulls and the bears," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. "This is going to be like Rocky III. It's going to be bloody."
Estimates of where crude prices are headed vary. Many analysts expect prices to rise to at least $100 a barrel, but a growing chorus is warning that futures are soon due for a sharp downturn.
Few analysts believe the underlying fundamentals of supply and demand support such high prices. Many blame speculative investing fueled by the weak dollar for oil's recent run-up. Oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the U.S. currency is falling.
Consumers and businesses are nearly as preoccupied as traders with the $100 level, Flynn said. The shock value of oil's recent run-up already has caused many to limit their consumption, Flynn said.
"In all my years watching the price of oil, anytime we've come up this far this fast, it's always caused demand to slow down," he said.
Crude prices are within the range of inflation-adjusted highs set in early 1980, however. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.
Earlier in Friday's session, news of two shutdowns in the North Sea exacerbated supply worries. But oil companies operating in the region said Friday that they had begun restarting shut-in output totaling at least 330,000 barrels of oil equivalent a day.
In London, Brent crude rose 39 cents to settle at $93.18 a barrel on the ICE Futures exchange.
Heating oil futures rose 1.3 cent Friday to settle at $2.6188 a gallon on the Nymex, while natural gas futures rose 18.4 cents to $7.897 per 1,000 cubic feet.
Gasoline prices climbed 1.84 cent to settle at $2.4560 a gallon.
Energy investors worry that any slowdown in the U.S. or global economy will crimp demand for oil and gasoline. The U.S. is the world's largest user of oil, accounting for about a quarter of daily petroleum consumption.