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Oil above US$97 on Europe hopes, Libyan disruption

Source: Agencies | December 17, 2013, Tuesday | Online Edition

The price of oil rose above US$97 a barrel yesterday, lifted by new signals that Europe's economy is on the mend and by the ongoing closure of export terminals in Libya.

Benchmark US crude for January delivery rose 88 cents to close at US$97.48 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark used to price international oil used by many US refineries, closed at US$110.47 in London.

In Europe, business sentiment is rising for the first time in three months, according to a survey of the 17-country eurozone. The monthly purchasing managers' index for the eurozone from financial information company Markit rose to 52.1 in December from 51.7 in November, after two consecutive months of declines. Anything above 50 indicates expansion, which would typically translate into higher demand for crude.

At the same time, Libyan oil terminals that were expected to open last weekend remained shut, reducing expected supplies. A militia from eastern Libya controlling the export hubs said the central government in Tripoli had failed to meet its demands, mainly a share of oil revenues.

Traders will be watching closely the Federal Reserve's decision Wednesday on whether to maintain its monthly US$85 billion in monetary stimulus. There are growing expectations that the Fed could decide to start cutting back following recent strong US economic data reports and signs of an imminent budget agreement in Congress.

Any reduction of stimulus could result in a stronger dollar. That would make commodities priced in dollars, such as crude, more expensive to foreign buyers and driving down demand.

In other energy futures trading on the Nymex:

— Wholesale gasoline rose 1.4 cents to US$2.644 a gallon.

— Heating oil rose 1.5 cents to US$2.99 a gallon.

— Natural gas fell 7.2 cents to US$4.279 per 1,000 cubic feet.

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