Oil jumps as Libya clashes intensify

Last updated 07:53 07/03/2011

Relevant offers

Brent oil prices pushed above US$116 a barrel and US oil jumped more than US$3 to its highest since September 2008 on Friday, as fighting in Libya worsened and protests in the Middle East intensified.

Investors piled into the oil market fearing extended supply disruptions in Libya as rebels fought security forces in Ras Lanuf, a major oil terminal.

And growing unrest in Bahrain and Yemen ratcheted up anxiety over Saudi Arabia, where Saudi Shi'ites staged protests on Thursday.

Prices closed out a second big weekly gain with news that hedge funds and big speculators had increased their bullish bets on US oil prices by over 30 percent in the week to March 1, taking their net long position to a record high as they braced for further turbulence in the region.

"Tension in the Middle East is like a runaway train," said Michael Hewson, an analyst at CMC Markets in London.

"Once it starts, it's very difficult to stop. And if there is a danger that it impacts the supply chain, people will understandably get nervous."

Brent crude futures for April delivery rose US$1.18 to settle at US$115.97 a barrel, having reached a high of US$116.49. Brent posted a 3.4-percent gain for the week, after rising 9.4 percent last week.

US crude for April delivery rose US$2.51 to settle at US$104.42 a barrel, the highest close since September 2008.

West Texas Intermediate crude outpaced Brent for a third day, thanks to an upbeat US jobs report and as traders took profits on short positions in the Brent/WTI spread after it hit a record US$16.91 last week.

Brent's premium to its US counterpart fell US$1.33 to US$11.55 a barrel, based on settlement prices, continuing to retreat from last week's record US$16.91.

US crude late reached a high of US$105.17 in after-hours trade.

The U.S. move was aided by data showing U.S. nonfarm payrolls rose more than forecast in February, hitting a nine-month high, and the jobless rate slipped to a nearly two-year low of 8.9 percent.

News of refinery maintenance in Europe that will help offset the loss of Libyan crude also weighed on Brent.

LIBYA CLASHES INTENSIFY

Libyan leader Muammar Gaddafi's forces battled rebels on several fronts as the country's crisis worsened and unrest erupted in the capital.

Rebels drove Gaddafi's forces from Ras Lanuf and have taken the eastern oil town, two rebel soldiers told Reuters by telephone.

Al Jazeera television reported that an oil facility at Zueitina, south of Benghazi was damaged and on fire.

Estimates of how much Libyan oil output is shut continued to creep higher, with the International Energy Agency revising up its estimate to 1 million barrels per day (bpd).

Ad Feedback

MIDDLE EAST UNREST

The unrest that has catapulted oil prices to well over US$100 a barrel, threatening to stoke inflation and endanger global growth, appeared to gather pace in countries adjacent to Saudi Arabia, the world's biggest exporter.

Demonstrations swelled into hundreds of thousands in Yemen, where President Ali Abdullah Saleh rejected an opposition plan for him to transfer power this year.

Fighting between Sunni and majority Shi'ite Muslims in central Bahrain injured several people overnight in the first sectarian violence since protests erupted in the Sunni-ruled kingdom two weeks ago.

Analysts have warned of the growing risk that such strife could spill across the border, and oil markets were unsettled by news a day ago of small crowds of Saudi Shi'ites staging protests in two towns in Saudi Arabia's oil-producing Eastern Province.

Hundreds of Omanis demanding jobs and political reforms demonstrated across the Gulf Arab sultanate, a small oil producer.

- Reuters

Special offers
Opinion poll

Would you like to see the Heathcote River cleaned up?

Absolutely, why does the Avon River get all the attention?

Yes, but only if it doesn't cost ratepayers too much

No, industry needs somewhere to dispose its waste

Vote Result

Related story: Alasdair Cassels to beautify Heathcote River

Featured Promotions

Sponsored Content