Oil leaps to 10-year peak on Mideast turmoil

The incidents stirred fears of fresh turmoil in the Middle East, racked by two weeks of Israeli-Palestinian violence.

U.S. Light crudes were 3.60 stronger at 36.80.

Israeli helicopter gunships fired missiles at Palestinian targets in the West Bank city of Ramallah following the killing of two Israeli soldiers by a Palestinian mob, witnesses said.

At least two people were hurt in the attack on Palestinian President Yasser Arafat8217;s headquarters and the police station where hours earlier hundreds of Palestinian youths had stabbed the two Israelis to death, police and witnesses said.

But the Palestinian leader, who also has a headquarters in self-ruled Gaza City, was not there. Witnesses said helicopters were also hovering over Arafat8217;s Gaza headquarters.

A U.S. Navy spokesman said four US sailors were killed and one went missing after a rubber raft loaded with explosives slammed into the USS Cole in the southern Yemeni Port of Aden.

He said that no one had claimed responsibility for the blast. Yemeni officials confirmed the explosion, but declined to comment on whether it was intentional.

The Cole belongs to the Arleigh Burke Class of AEGIS guided missile destroyer, described by military analysts as the world8217;s most technologically advanced surface naval fighter.

Tension was high elsewhere in the region after youths stormed a Palestinian police station in the West Bank and stabbed to death two captured Israeli soldiers.

The killings seemed certain to inflame feelings and threaten intensive international efforts to end Israeli-Palestinian violence in which at least 97 people have been killed, all but seven of them Palestinians or Israeli Arabs.

Worries that low U.S. Heating oil inventories may prove insufficient to keep American households warm provided a further bullish prop to sentiment amid the first cold blasts of winter.

Prices began climbing when the American Petroleum Institute API industry group said on Tuesday there was 51 percent less heating oil in East Coast storage than in early October 1999.

The East Coast, particularly the Northeast, is highly dependent on the fuel to heat homes and offices.

Prices had steadied earlier on word that Saudi Arabia kept November crude export allocations at full volume, unchanged from last month under its pledge to boost supplies to cool prices.

Since Saudi Arabia has the vast majority of OPEC8217;s spare production capacity, its output moves are closely watched by traders struggling to track the kingdom8217;s exact supply levels.

The Organisation of the Petroleum Exporting Countries has been removing supply curbs imposed in 1998 and 1999 to rescue prices from a slump under 10 a barrel. This year8217;s rally to 10-year highs has forced OPEC to raise production three Times since April.

Although it has not impacted on prices yet, the market is also keeping a close eye on a day-old indefinite strike by Venezuelan oil workers.