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Oil prices hit US$100 a barrel
Source: Agencies |
February 24, 2011, Thursday
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OIL hit US$100 per barrel yesterday for the first time in 2 1/2 years as the unrest in Libya worsened and Moammar Gadhafi continued to lose his grip on the oil-rich country.
West Texas Intermediate crude for April delivery jumped US$2.68, or 2.8 percent, to settle at US$98.10 a barrel on the New York Mercantile Exchange. Earlier in the day, prices hit triple digits for the first time since Oct. 2, 2008. West Texas Intermediate has soared 18 percent since mid-February.
In London, Brent crude added US$5.47, or 5 percent, to settle at US$111.25 per barrel on the ICE Futures exchange. Brent, which is used to price oil in Asia, Europe and other global markets, passed the US$100 mark on Jan. 31.
The uprisings in Tunisia and Egypt earlier this month already had markets on edge before protests escalated in Libya, which has the biggest oil reserves in Africa. The rebellion widened yesterday as protesters overwhelmed government buildings and advanced around Tripoli, the capital.
French oil giant Total said it started to wind down its oil operations in Libya, where it produced an average of 55,000 barrels per day last year. That follows similar moves by other oil companies.
Libya's biggest oil producer, Eni, idled operations that produce 244,000 barrels of oil and gas per day. Spain's Repsol-YPF and Austrian oil company OMV also suspended operations. Germany's Wintershall said it shut down operations that produced up to 100,000 barrels of oil per day. Evacuations of oil company employees and their families continue.
Barclays Capital estimates that as much as 1 million barrels per day of production has been shut down so far. In January, Libya produced almost 1.7 million barrels per day of oil and natural gas liquids, according to the International Energy Agency.
The production losses will be felt mostly in Europe. Ireland relies on Libya for 23 percent of its oil imports, while 22 percent of Italy's oil imports are from Libya. The U.S. imported only about 51,000 barrels per day from Libya, less than 1 percent of its total crude imports.
The International Energy Agency and Saudi Arabia have pledged to make additional oil available to cover any shortfall in world supplies, but that hasn't eased tensions in oil markets.
Larry Goldstein, a director at the Energy Policy Research Foundation in Washington, said Libya's oil is a high-quality variety that is used to produce products like gasoline, jet fuel and diesel. Some refineries won't be able to run on Saudi Arabia's lower-grade crude, so a sustained shutdown in Libya could start a bidding war for comparable kinds of crude.
"That would raise product prices immediately," Goldstein said.
Analysts are watching similar protests in oil-rich Bahrain. Barclays analyst Helima Croft said the uprising in Bahrain could spill over to the eastern provinces of Saudi Arabia. While it probably won't hurt the Saudi's huge oil-production operations, "it's going to make a lot of people nervous," Croft said.
Major oil stocks rose in yesterday trading. Exxon Mobil gained US$1.63 to close at US$87.07. ConocoPhillips added US$1.96, or 2.6 percent, to close at US$78.57. Chevron rose US$1.95 to settle at US$102.27. Occidental Petroleum rose 82 cents to close at US$102.96. Marathon oil gained US$1.47, or 3.1 percent, to close at US$49.18.
In other Nymex trading in March contracts, heating oil added 11.3 cents to settle at US$2.9166 per gallon and gasoline gained 12.1 cents to settle at US$2.8677 per gallon. Natural gas picked up 2.9 cents to settle at US$3.936 per 1,000 cubic feet.
West Texas Intermediate crude for April delivery jumped US$2.68, or 2.8 percent, to settle at US$98.10 a barrel on the New York Mercantile Exchange. Earlier in the day, prices hit triple digits for the first time since Oct. 2, 2008. West Texas Intermediate has soared 18 percent since mid-February.
In London, Brent crude added US$5.47, or 5 percent, to settle at US$111.25 per barrel on the ICE Futures exchange. Brent, which is used to price oil in Asia, Europe and other global markets, passed the US$100 mark on Jan. 31.
The uprisings in Tunisia and Egypt earlier this month already had markets on edge before protests escalated in Libya, which has the biggest oil reserves in Africa. The rebellion widened yesterday as protesters overwhelmed government buildings and advanced around Tripoli, the capital.
French oil giant Total said it started to wind down its oil operations in Libya, where it produced an average of 55,000 barrels per day last year. That follows similar moves by other oil companies.
Libya's biggest oil producer, Eni, idled operations that produce 244,000 barrels of oil and gas per day. Spain's Repsol-YPF and Austrian oil company OMV also suspended operations. Germany's Wintershall said it shut down operations that produced up to 100,000 barrels of oil per day. Evacuations of oil company employees and their families continue.
Barclays Capital estimates that as much as 1 million barrels per day of production has been shut down so far. In January, Libya produced almost 1.7 million barrels per day of oil and natural gas liquids, according to the International Energy Agency.
The production losses will be felt mostly in Europe. Ireland relies on Libya for 23 percent of its oil imports, while 22 percent of Italy's oil imports are from Libya. The U.S. imported only about 51,000 barrels per day from Libya, less than 1 percent of its total crude imports.
The International Energy Agency and Saudi Arabia have pledged to make additional oil available to cover any shortfall in world supplies, but that hasn't eased tensions in oil markets.
Larry Goldstein, a director at the Energy Policy Research Foundation in Washington, said Libya's oil is a high-quality variety that is used to produce products like gasoline, jet fuel and diesel. Some refineries won't be able to run on Saudi Arabia's lower-grade crude, so a sustained shutdown in Libya could start a bidding war for comparable kinds of crude.
"That would raise product prices immediately," Goldstein said.
Analysts are watching similar protests in oil-rich Bahrain. Barclays analyst Helima Croft said the uprising in Bahrain could spill over to the eastern provinces of Saudi Arabia. While it probably won't hurt the Saudi's huge oil-production operations, "it's going to make a lot of people nervous," Croft said.
Major oil stocks rose in yesterday trading. Exxon Mobil gained US$1.63 to close at US$87.07. ConocoPhillips added US$1.96, or 2.6 percent, to close at US$78.57. Chevron rose US$1.95 to settle at US$102.27. Occidental Petroleum rose 82 cents to close at US$102.96. Marathon oil gained US$1.47, or 3.1 percent, to close at US$49.18.
In other Nymex trading in March contracts, heating oil added 11.3 cents to settle at US$2.9166 per gallon and gasoline gained 12.1 cents to settle at US$2.8677 per gallon. Natural gas picked up 2.9 cents to settle at US$3.936 per 1,000 cubic feet.
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