Tags: Oil | Rises | Highest | Level | Almost | 30 | Months

Oil Rises to $105.75, Highest Level in Almost 30 Months on Libya Strikes

Wednesday, 23 March 2011 03:54 PM

Crude climbed near a 30-month high as the U.S. and its allies prepared to attack Libyan leader Moammar Gadhafi’s troops and protesters clashed with government forces in Syria, bolstering concern supplies will be disrupted.

Oil rose 0.7 percent after U.S. Admiral Samuel Locklear said more strikes will be launched in the “coming hours and days.” Prices have advanced 16 percent this year as unrest spread from Tunisia to Egypt, Yemen, Bahrain and Syria. A U.S. government report showed that crude supplies climbed as gasoline stockpiles fell to the lowest level this year.

“Prices are moving up because of the fear premium,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in New York. “Oil inventories continue to build but nobody cares because they are afraid about what’s taking place in the Middle East. The fundamentals don’t matter right now.”

Crude oil for May delivery rose 78 cents to $105.75 a barrel on the New York Mercantile Exchange, the highest settlement since Sept. 26, 2008. Prices have advanced 29 percent in the past year.

Brent crude oil for May settlement slipped 16 cents to $115.54 a barrel on the London-based ICE Futures Europe exchange at 2:31 p.m. in New York.

Credit Suisse Group AG raised its estimates for Brent crude for 2011 to an average of $105.80 a barrel and for West Texas Intermediate on the Nymex by 10 percent to $93.80, the Zurich- based bank said in a note today. The bank cited accelerating demand growth and Middle East output disruptions.

Bomb Attack

Prices briefly extended gains after a bomb blast at a bus stop outside of Jerusalem’s central station injured at least 31 people today. Retaliatory strikes by Israel have bolstered oil in the past because they raise the prospect of a halt in shipments from the region.

“Prices even moved on a bomb attack in Jerusalem, which shows just how nervous the market is,” Horwitz said.

The alliance of nations enforcing the no-fly zone over Libya now is “considering all options” for using air power to protect civilians in battleground cities of Misrata, Ajdabiya and Zawiyah, Locklear told reporters at the Pentagon via telephone from his command ship in the Mediterranean Sea.

The Libya conflict, which began in February, is the bloodiest in uprisings that have spread across the Middle East.

“There isn’t any reason for prices to move lower given the geopolitical situation,” said Ric Navy, a broker at BNP Paribas SA in New York. “It looks like we will continue moving higher, it’s just a question of how choppy it will be.”

Syrian Shooting

At least four people were killed today in a shooting near a mosque in the southern Syrian town of Daraa in protests that have engulfed the country for the past week. Yemeni President Ali Abdullah Saleh won backing from parliament to enforce emergency rule, while agreeing to hand over power by the end of the year.

“Gadhafi has sworn to fight to the end and we’re seeing increased violence in Syria and Yemen, which all point to falling supply,” said Mike Fitzpatrick, a partner with the Kilduff Group in New York, a hedge fund that concentrates on energy. “The U.K. cut its GDP forecast and we should see other European countries follow suit, which will hit demand.”

Chancellor of the Exchequer George Osborne said the British economy will grow more slowly than previously forecast in 2011. The Office for Budget Responsibility predicts annual growth in 2011 of 1.7 percent, down from the 2.1 percent forecast in November, Osborne said.

Purchases of new U.S. homes declined in February to the slowest pace on record, figures from the Commerce Department showed today in Washington.

Geopolitical Premium

“Prices are up because of fear related to all of the headlines from the Middle East,” said Edward Meir, senior analyst at MF Global in New York. “None of these countries are very important for oil supplies, other than Libya, and the Saudis are making up for most of that.”

U.S. crude inventories rose 2.13 million barrels to 352.8 million last week, the Energy Department report showed. Supplies were forecast to climb by 1.5 million barrels, according to the median of 15 analyst estimates in a Bloomberg News survey.

Gasoline stockpiles fell 5.32 million barrels to 219.7 million, the lowest level since December, the report showed. Supplies were forecast to decline by 2 million barrels.

“There continue to be big drawdowns in gasoline, which is quite bullish, while crude supplies continue to rise,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. “Gasoline demand is rising as the economy recovers and soon gasoline may start to outperform crude.”

Fuel Consumption

Total fuel demand increased 1 percent to 19.3 million barrels a day last week. Gasoline consumption climbed 2.8 percent to 9.07 million barrels a day.

Oil volume in electronic trading on the Nymex was 447,818 contracts as of 2:32 p.m. in New York. Volume totaled 542,371 contracts yesterday, 33 percent below the average of the past three months. Open interest was 1.5 million contracts, the lowest level since Jan. 25.

© Copyright 2018 Bloomberg News. All rights reserved.

1Like our page
Crude climbed near a 30-month high as the U.S. and its allies prepared to attack Libyan leader Moammar Gadhafi s troops and protesters clashed with government forces in Syria, bolstering concern supplies will be disrupted.Oil rose 0.7 percent after U.S. Admiral Samuel...
Wednesday, 23 March 2011 03:54 PM
Newsmax Media, Inc.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved