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Oil prices climb on growing Middle East unrest
Source: Agencies |
February 17, 2011, Thursday
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Online Edition
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OIL prices climbed yesterday as anti-government demonstrations broke out in Libya and Israel's foreign minister claimed that Iran is about to send two warships through the Suez Canal on the way to Syria.
The news added to tension in the region and "absolutely moved markets," according to PFGBest oil analyst Phil Flynn. He said traders are worried that spreading unrest in the Middle East will disrupt oil production and shipments in the region.
"The face of the Middle East is changing in pretty dramatic fashion in a very short period of time," he said. "The risk to supply is going up."
Benchmark West Texas Intermediate crude for March delivery rose 67 cents to settle at US$84.99 a barrel on the New York Mercantile Exchange.
In London, Brent crude rose US$2.14 to settle at US$103.78 per barrel on the ICE Futures exchange.
Analyst Fadel Gheit noted that the regime change in Egypt could bleed into other countries and cause supply disruptions in Saudi Arabia and other major producers.
Crude prices rose even though oil supplies grew in the U.S., the world's largest petroleum consumer.
The Energy Department said yesterday that U.S. stockpiles of crude and gasoline both rose again last week while distillates, which include heating oil and diesel, declined. All three products are at or above the average range for the past five years.
Meanwhile, gasoline pump prices reached a 28-month high yesterday even though demand for gas is weak.
The U.S. average for regular gasoline rose to US$3.133 a gallon. That's about US$1.20 a gallon more than the price at the pump two years ago, according to AAA, Wright Express and the Oil Price Information Service.
Higher gas prices are a result of several factors that have created a bottleneck for supplies of West Texas Intermediate crude stored at Cushing, Oklahoma, which is the delivery point for oil traded on the Nymex.
More North American oil is being produced and delivered to the Cushing facility, but existing pipelines can't move all of the crude out to refineries. And there are no pipelines to Gulf coast refineries, which have the capacity to produce about half the nation's daily supply of gasoline.
In addition, the price of Brent crude, used by refineries on the U.S. East Coast, is soaring. Although it is produced in Europe's North Sea, Brent is used to price oil produced in other parts of the world, including South America and Africa, which is shipped to refineries in the U.S.
In other Nymex trading, heating oil rose 4.58 cents to settle at US$2.7748 a gallon and gasoline gained 5.59 cents to settle at US$2.5447 a gallon. Natural gas lost 5.5 cents to settle at US$3.921 per 1,000 cubic feet.
The news added to tension in the region and "absolutely moved markets," according to PFGBest oil analyst Phil Flynn. He said traders are worried that spreading unrest in the Middle East will disrupt oil production and shipments in the region.
"The face of the Middle East is changing in pretty dramatic fashion in a very short period of time," he said. "The risk to supply is going up."
Benchmark West Texas Intermediate crude for March delivery rose 67 cents to settle at US$84.99 a barrel on the New York Mercantile Exchange.
In London, Brent crude rose US$2.14 to settle at US$103.78 per barrel on the ICE Futures exchange.
Analyst Fadel Gheit noted that the regime change in Egypt could bleed into other countries and cause supply disruptions in Saudi Arabia and other major producers.
Crude prices rose even though oil supplies grew in the U.S., the world's largest petroleum consumer.
The Energy Department said yesterday that U.S. stockpiles of crude and gasoline both rose again last week while distillates, which include heating oil and diesel, declined. All three products are at or above the average range for the past five years.
Meanwhile, gasoline pump prices reached a 28-month high yesterday even though demand for gas is weak.
The U.S. average for regular gasoline rose to US$3.133 a gallon. That's about US$1.20 a gallon more than the price at the pump two years ago, according to AAA, Wright Express and the Oil Price Information Service.
Higher gas prices are a result of several factors that have created a bottleneck for supplies of West Texas Intermediate crude stored at Cushing, Oklahoma, which is the delivery point for oil traded on the Nymex.
More North American oil is being produced and delivered to the Cushing facility, but existing pipelines can't move all of the crude out to refineries. And there are no pipelines to Gulf coast refineries, which have the capacity to produce about half the nation's daily supply of gasoline.
In addition, the price of Brent crude, used by refineries on the U.S. East Coast, is soaring. Although it is produced in Europe's North Sea, Brent is used to price oil produced in other parts of the world, including South America and Africa, which is shipped to refineries in the U.S.
In other Nymex trading, heating oil rose 4.58 cents to settle at US$2.7748 a gallon and gasoline gained 5.59 cents to settle at US$2.5447 a gallon. Natural gas lost 5.5 cents to settle at US$3.921 per 1,000 cubic feet.
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