Oil Gains a Second Day on Middle East Supply Risk, U.S. Economy

Sunday, 06 Mar 2011 07:40 PM

 

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Oil gained a second day, rising above $105 a barrel in New York, as unrest in Libya renewed concern supply disruptions may spread while signs of U.S. economic recovery stoked speculation fuel demand will rise.

Futures rose as much as 1 percent after fighting between Libyan rebels and troops loyal to Muammar Qaddafi intensified as the opposition advanced west from the oil hub of Ras Lanuf yesterday toward the leader’s hometown of Sirte. Prices closed at the highest since September 2008 on March 4 after a U.S. government report showed the nation’s jobless rate fell to 8.9 percent in February, the lowest since April 2009.

“It’s still very much a Middle Eastern story,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “The market was pretty pleased with the U.S. non-farm payroll numbers, which shows some improvement in the labor market.”

Crude for April delivery gained as much as $1.02 to $105.44 a barrel in electronic trading on the New York Mercantile Exchange, and was at $105.24 at 11:14 a.m. in Sydney. The contract added $2.51 to $104.42 on March 4, the highest since Sept. 26, 2008. Futures increased 6.7 percent last week, the third straight advance.

Brent crude for April settlement gained 56 cents, or 0.5 percent, to $116.53 a barrel on the London-based ICE Futures Europe exchange. The contract rose $1.18, or 1 percent, to $115.97 on March 4. The contract gained 3.4 percent last week, the sixth straight weekly increase.

Saudi Arabia

Violence in Libya has cut output in the North African country by as much as 1 million barrels a day, according to the International Energy Agency. Libya pumped 1.59 million barrels a day in January, Bloomberg News estimates show.

Demonstrations have toppled leaders in Tunisia and Egypt, while there have been protests in countries including Iran, Yemen and Oman. In Saudi Arabia, the biggest oil producer in the Organization of Petroleum Exporting Countries, websites have called for a nationwide “Day of Rage” on March 11 and March 20, according to Human Rights Watch.

“We’re hearing increasing calls for protest in Saudi Arabia, which is the big, great threat hanging over the oil market at the moment,” National Australia Bank’s Westmore said. “You couple the supply risks in the Middle East with some more positive demand data from the developed world and it’s not surprising that you see the oil price push higher.”

U.S. Economy

The turmoil in the Middle East also pushed oil products prices higher. Gasoline for April delivery gained 1 cent, or 0.3 percent, to $3.0563 a gallon on the New York Mercantile Exchange. Prompt prices advanced 11 percent last week.

U.S. payrolls rose 192,000 in February compared with the 196,000 median estimate of economists surveyed by Bloomberg News, Labor Department figures showed March 4. Employment climbed in manufacturing, construction and temporary help agencies, while state and local government payrolls fell.

The unemployment rate was forecast to increase to 9.1 percent, according to the median of responses in a Bloomberg News survey of economists. The U.S. is the biggest oil-consuming country, responsible for 22 percent of global demand in 2009, according to BP Plc, which publishes its BP Statistical Review of World Energy each June.


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