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Oil prices settle above US$101 a barrel again
Source: Agencies |
March 18, 2011, Friday
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OIL prices soared more than 3.5 percent, climbing back above US$101 per barrel yesterday after a crackdown on protesters in Bahrain and the US stepped up pressure for UN action against Libya's Moammar Gadhafi.
Prices also rose on the expectation that Japan will boost fuel imports as its refineries and factories recover from the earthquake and tsunami disaster. And the world's largest oil consumer, the US, reported that unemployment claims dropped to the lowest level since July 2008, raising hopes that oil and gasoline demand will soon increase.
Benchmark crude added US$3.44 to settle at US$101.42 a barrel on the New York Mercantile Exchange.
In London, Brent crude rose US$4.21, nearly 4 percent, to settle at US$114.65 per barrel on the ICE Futures exchange.
Oil prices have been pushed and pulled in recent weeks by international crises that could have major impacts on world oil supplies and demand.
The rebellion in Libya has halted oil shipments of about 1.5 million barrels per day from that country. Libya produced about 2 percent of the world's oil. Saudi Arabia and other OPEC nations have said they will increase production to cover shortfalls of Libyan oil, which goes mostly to Europe.
On yesterday forces loyal to Moammar Gadhafi continued to advance against rebels in the eastern part of Libya. Gadhafi's rapid advance seems to have spurred the US to press for broader UN authorization for international air, sea and land forces to stop Gadhafi's attacks on his own people. The US has said it would not act without United Nations authority. Security Council members appear divided on the matter, with China and Russia doubtful about other countries getting involved in Libya's affairs.
Protests in Bahrain led by Shi'ite Muslims have raised further concerns about the stability of the Middle East. The tiny country doesn't have much oil of its own, but Bahrain is just 15 miles (25 kilometers) from the Saudi Arabia border and the violence could deepen sectarian divisions between Sunni and Shi'ite Muslims in the region.
Saudi Arabia, ruled by Sunnis, is the world's largest oil exporter and produces about 8.4 million barrels per day, enough to satisfy around 8 percent of world demand.
The Saudis have sent troops to Bahrain as part of a multinational force defending the monarchy there. That move was sharply criticized by Iran's Shi'ite leadership, which recalled its ambassador to Saudi Arabia.
Helima Croft, an analyst with Barclays Capital, said Bahrain could become the new "central front" in an ongoing power struggle between Saudi Arabia and Iran. The violence also could hurt the Saudi's diplomatic relationship with the US That would send shockwaves through oil markets, Croft said.
Saudi Arabia is the only country with enough spare oil production to meet increased world demand "and thus the last word on any attempt to drive down prices through production increases," she said. Analysts say the Saudis can boost their daily production by more than four million barrels.
Meanwhile, there was positive economic news in the US The Labor Department said yesterday that applications for unemployment benefits fell last week, signaling modest job growth. And FedEx Corp. reported higher quarterly revenue. Although profits were hurt by higher fuel prices and severe winter weather, the shipper had a bullish outlook for later this year. Stock markets bounced back after taking a beating on Wednesday. The Dow Jones Industrial Average was up 1.2 percent in afternoon trading. The Nasdaq and the Standard & Poor's 500 were higher as well.
In other Nymex trading for April contracts, heating oil gained 6.77 cents to settle at US$3.0649 per gallon and gasoline futures added 10.69 cents to settle at US$2.9506 per gallon. Natural gas rose 22 cents to settle at US$4.158 per 1,000 cubic feet. In its weekly report, the Energy Department said the US natural gas supplies shrank by 56 billion cubic feet. Supplies are about 1.4 percent above the five-year average.
Prices also rose on the expectation that Japan will boost fuel imports as its refineries and factories recover from the earthquake and tsunami disaster. And the world's largest oil consumer, the US, reported that unemployment claims dropped to the lowest level since July 2008, raising hopes that oil and gasoline demand will soon increase.
Benchmark crude added US$3.44 to settle at US$101.42 a barrel on the New York Mercantile Exchange.
In London, Brent crude rose US$4.21, nearly 4 percent, to settle at US$114.65 per barrel on the ICE Futures exchange.
Oil prices have been pushed and pulled in recent weeks by international crises that could have major impacts on world oil supplies and demand.
The rebellion in Libya has halted oil shipments of about 1.5 million barrels per day from that country. Libya produced about 2 percent of the world's oil. Saudi Arabia and other OPEC nations have said they will increase production to cover shortfalls of Libyan oil, which goes mostly to Europe.
On yesterday forces loyal to Moammar Gadhafi continued to advance against rebels in the eastern part of Libya. Gadhafi's rapid advance seems to have spurred the US to press for broader UN authorization for international air, sea and land forces to stop Gadhafi's attacks on his own people. The US has said it would not act without United Nations authority. Security Council members appear divided on the matter, with China and Russia doubtful about other countries getting involved in Libya's affairs.
Protests in Bahrain led by Shi'ite Muslims have raised further concerns about the stability of the Middle East. The tiny country doesn't have much oil of its own, but Bahrain is just 15 miles (25 kilometers) from the Saudi Arabia border and the violence could deepen sectarian divisions between Sunni and Shi'ite Muslims in the region.
Saudi Arabia, ruled by Sunnis, is the world's largest oil exporter and produces about 8.4 million barrels per day, enough to satisfy around 8 percent of world demand.
The Saudis have sent troops to Bahrain as part of a multinational force defending the monarchy there. That move was sharply criticized by Iran's Shi'ite leadership, which recalled its ambassador to Saudi Arabia.
Helima Croft, an analyst with Barclays Capital, said Bahrain could become the new "central front" in an ongoing power struggle between Saudi Arabia and Iran. The violence also could hurt the Saudi's diplomatic relationship with the US That would send shockwaves through oil markets, Croft said.
Saudi Arabia is the only country with enough spare oil production to meet increased world demand "and thus the last word on any attempt to drive down prices through production increases," she said. Analysts say the Saudis can boost their daily production by more than four million barrels.
Meanwhile, there was positive economic news in the US The Labor Department said yesterday that applications for unemployment benefits fell last week, signaling modest job growth. And FedEx Corp. reported higher quarterly revenue. Although profits were hurt by higher fuel prices and severe winter weather, the shipper had a bullish outlook for later this year. Stock markets bounced back after taking a beating on Wednesday. The Dow Jones Industrial Average was up 1.2 percent in afternoon trading. The Nasdaq and the Standard & Poor's 500 were higher as well.
In other Nymex trading for April contracts, heating oil gained 6.77 cents to settle at US$3.0649 per gallon and gasoline futures added 10.69 cents to settle at US$2.9506 per gallon. Natural gas rose 22 cents to settle at US$4.158 per 1,000 cubic feet. In its weekly report, the Energy Department said the US natural gas supplies shrank by 56 billion cubic feet. Supplies are about 1.4 percent above the five-year average.
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