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LONDON -- Oil has leapt back above $50 as President George W. Bush edges toward U.S. election victory, a result that traders say will bolster fuel demand and underpin anxiety over the security of Middle East supply, reported Reuters.
U.S. light crude rose 86 cents to $50.48, reversing part of a 12 percent pullback over the past week. Brent crude was up 79 cents at $47.34 per barrel.
White House chief of staff Andy Card said Bush was convinced he had won re-election but would hold off a formal victory declaration to give Democrat John Kerry "time to reflect" on the results.
Traders said a second Bush administration would continue filling U.S. emergency oil stockpiles and could stoke traders' nerves about U.S. policy in the oil-producing Middle East, particularly OPEC's second-biggest producer Iran.
Prices had tumbled from last week's record high at $55.67 on speculation that a win for Democratic challenger John Kerry would halt deliveries into the Strategic Petroleum Reserve, and do more to encourage energy conservation.
"A Bush status quo results in somewhat higher oil prices both in the short and the longer term in my view," said Tim Evans, analyst at IFR Energy Services. "In the short run, it means more oil drained from the market into the Strategic Petroleum Reserve."
Bush plans to fill the final 30 million barrels of the 700 million barrel SPR by next year, and some traders expect a second Bush administration to expand the reserve to one billion barrels.
"A Bush victory will be big for oil demand and keep prices high," said Phil Flynn, an analyst at Alaron Trading in Chicago. "Not only will the SPR be filled but I think they may expand it."
Traders also fear further instability in the Middle East, a factor that has fuelled oil's rise of more than 50 percent this year.
"In particular, if another Bush government moves on to Iran, then oil prices would go very high and really threaten China's economic development," said Andy Xie, Morgan Stanley's chief Asia economist.
The pre-election price fall was fueled by a build in U.S. crude stocks, easing some concern about winter fuel supplies that are significantly below 2003 levels.