WORLD oil prices rose in Asian trade yesterday, fueled by the conflict in the Middle East after Israel stepped up its military campaign on Gaza, analysts said.

New York?s main contract, light sweet crude for February delivery, was up $1.21 to $47.55 in the afternoon. The contract closed $1.74 higher at $46.34 Friday on the New York Mercantile Exchange.

Brent North Sea crude for February delivery was trading 81 cents higher at $47.72 in afternoon trade Monday. It closed $1.32 higher on Friday at $46.91.

?The Gaza conflict added to the geopolitical risk premium embodied in the oil price,? said David Moore, a Sydney-based commodity strategist with the Commonwealth Bank of Australia.

In Manila, the Energy Department said oil prices would average between $40 and $60 a barrel this year, and that consumers could expect another cut in gas, diesel and kerosene prices this month.

?For January, because of the low monthly average for December, our reckoning point, we could reasonably expect more reduction in [pump] prices,? Energy Secretary Angelo Reyes said.

Meanwhile, the steepest plunge in crude prices on record may be setting up oil investors for a rally this year, if history is any guide.

The so-called forward curve of futures contracts traded on the New York Mercantile Exchange suggests oil will rise 30 percent to $60.29 a barrel by December.

The curve looks almost the same as 10 years ago, after Russia?s default and the collapse of the Long-Term Capital Management LP hedge fund raised concerns that a global economic slowdown would reduce energy demand. Crude prices fell 25 percent in the final quarter of 1998, the steepest drop in seven years.

Bets on a recovery paid off then as the Organization of Petroleum Exporting Countries cut production 6.9 percent, causing prices to more than double in 1999.

Now, Opec is pledging to reduce supply 9 percent, companies from Royal Dutch Shell Plc to Valero Corp. are postponing new energy projects, and central banks are cutting interest rates to end the worst financial crisis since World War II.

?The world economy will get into a more stable environment most probably in the second half of next year,? said Christoph Eibl, who helps manage more than $1 billion at Tiberius Asset Management AG in Zug, Switzerland.

?Commodities are thus due for a rebound. Crude oil has the best potential.?

Eibl?s Absolute Return Commodity Fund gained 7.5 percent last year in part by betting on agricultural commodities and industrial metals. He beat the Standard & Poor?s GSCI Index of 24 commodities, which dropped 43 percent, and oil, which fell 54 percent. A 30-percent gain this year would be the most since the 57 percent jump in 2007. Bloomberg, with AFP and Alena Mae S. Flores