Oil rises 2 percent on U.S. growth, Egypt turmoil

Oil prices jumped more than 2 percent on Friday as investors reacted to accelerating growth in the United States in the fourth quarter of 2010 and increasing unrest in Egypt.

Protests in Egypt and the government's response intensified, making investors more wary about the unrest.

Earlier, oil prices received a boost from news that the U.S. economy gathered speed in the fourth quarter, fueled by the biggest gain in consumer spending in more than four years and strong exports.

"There is growing concern about the situation in Egypt and Yemen and there may be worry about not going into the weekend being too short," said Phil Flynn, analyst at PFGBest Research in Chicago.

U.S. crude oil for March delivery rose $2.25, or 2.6 percent, to $87.89 a barrel at 11:35 a.m. EST (1635 GMT).

In London, ICE Brent crude for March rose $1.05 to $98.44 a barrel, reaching $98.95 earlier.

The smaller gains squeezed Brent's premium over its U.S. counterpart, which had stretched to more than $12 per barrel, its widest since January 2009.

Total U.S. crude volume was above 822,600 lots traded just after 11:30 a.m. EST (1630 GMT), according to Reuters data, 19 percent above the 250-day average and already surpassing Thursday's 789,077-lot total.

Total Brent trading volume was above 387.000 lots traded, according to Reuters data, 1.5 percent above the 250-day average.

(Additional reporting by Gene Ramos in New York and Christopher Johnson in London; Editing by David Gregorio)

Source