Oil settles above $48 on uneasy Mideast

SIOUX FALLS, S.D. — Israel's ground offensive in Gaza and a dispute between Ukraine and Russia over gas imports pushed oil prices above $48 a barrel Monday, but some analysts say there's more than just unrest in the Middle East behind the rally.

Light, sweet crude for February delivery rose $2.47 cents to settle at $48.81 a barrel on the New York Mercantile Exchange.

Israel seized control of high-rise buildings and attacked houses, mosques and smuggling tunnels as it pressed its offensive against the Gaza Strip's Hamas rulers, while the U.S. joined a number of countries calling for a cease-fire.

Energy consultancy Cameron Hanover said some traders like to point to violence in the Middle East as a cause of higher oil prices, but the reality is slightly different.

"Any time that prices react by moving higher, in response to violence in the Middle East, particularly in non-oil producing countries like Israel or the Palestinian territories next door, it is a good sign that the market wants to move higher," the firm said in its Daily Energy Hedger report.

Phil Flynn, an analyst at Alaron Trading Corp. in Chicago, said there seems to be a mood change in the market and a belief that the economic doom and gloom has hit bottom.

"Would we really be concerned about these geopolitical issues as it relates to oil if we didn't think that the demand was going to improve somewhat in the coming year? Probably not," Flynn said.

An Iranian Revolutionary Guard commander on Monday urged Islamic nations to use crude oil as a weapon to exert pressure on Western backers of Israel. But many analysts doubt that will happen, because oil-producing nations — including Iran — would harm themselves by cutting off petroleum supplies.

"An oil embargo is just bad for business," said Serene Gardiner, oil products analyst at Standard Chartered Bank in Dubai.

Meanwhile Russian gas monopoly Gazprom has cut off gas shipments to Ukraine since Thursday in a dispute over payments, and Ukraine warned that European customers could see serious natural gas disruptions in about two weeks.