Crude oil jumps 5% as Libya protests spread
Crude oil prices jumped 5% Monday as violent protests spread in Libya, raising the possibility that oil supplies from that OPEC nation could be disrupted.
Crude oil jumps 5% as Libya protests spread
By Mark Ralston, AFP/Getty ImagesAn oilfield near central Los Angeles is seen through a fence. World oil prices have been rising on Mideast unrest.
By Mark Ralston, AFP/Getty Images
An oilfield near central Los Angeles is seen through a fence. World oil prices have been rising on Mideast unrest.Oil prices in 2011Our Oil Expert's Exclusive Trend
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Outlook for Oil and Gas in 2011.wealthwire.com/oil-report
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By early afternoon in Europe, benchmark light, sweet crude for March delivery was up $3.92 a barrel to $90.12 in electronic trading on the New York Mercantile Exchange. The April contract was up more than $4 to $94.05. A barrel is 42 gallons.
U.S. markets, including Nymex floor trading, were closed Monday for the Presidents' Day holiday.
In London, Brent crude for April delivery gained $1.73 to $104.25 a barrel on the ICE Futures exchange.
Stocks fell in Europe: By mid-afternoon London time, Germany's DAX index was 0.7% lower at 7,377 while the CAC-40 in Paris fell 0.7% to 4,130. The FTSE 100 index of leading British shares was down 0.2% at 6,068.
Markets in the U.S. were closed Monday for the President's Day holiday.
In currency markets, the euro fell 0.2% to $1.3665, while the dollar was unchanged at 83.16 yen. Among commodities, an ounce of gold spiked over $13 to $1,402.
The price spread between the U.S. light, sweet crude and European Brent contracts has narrowed slightly but still remains far above usual levels of a few dollars per barrel. Europe is considered more sensitive to disruptions of Middle East oil supplies, while large U.S. stockpiles of crude are one reason for the lower U.S. quotes.
On Sunday, Seif al-Islam Gadhafi, son of Libyan leader Moammar Gadhafi, warned protesters that they risked igniting a civil war in which Libya's oil wealth "will be burned." Libya exports at least 1 million barrels of crude a day.
"Compared to Tunisia (a minor crude exporter) or Egypt (not an exporter but a transit country), instability in Libya is a major concern to the oil industry," said analysts at JBC Energy in Vienna.
Anti-government demonstrations have spread to the Libyan capital of Tripoli and protesters seized military bases and weapons. In the eastern city of Benghazi, about 60 people were killed, while more than 200 have died since the unrest began seven days ago.
Oil traders are also closely watching recent protests in Iran, the second-largest crude exporter in the Organization of Petroleum Exporting Countries behind Saudi Arabia.
"The concerns in the market go beyond Libya," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "It's unlikely we're going to see any meaningful disruption of oil from the Middle East or North Africa, but the spread of this unrest has raised anxieties."
Some analysts are worried higher oil prices will undermine a fragile economic recovery in developed countries. For every $1 increase in the price of a gallon of gasoline, U.S. consumer spending falls about $120 billion, said Gerard Minack, an economist with Morgan Stanley.
"Energy is more important for developed-world consumers than food," Minack said. "This is why further sharp rises in oil prices, if they occur, would be likely to be seen as a threat to growth."
In other Nymex trading in March contracts, heating oil rose 5.22 cents to $2.7651 a gallon and gasoline gained 3.83 cents to $2.5896 a gallon. Natural gas futures lost 0.9 cent to $3.867 per 1,000 cubic feet.
Contributing: Alex Kennedy in SingaporeCopyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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