Oil rises on concerns about Libya and supplies
Monday, March 21, 2011; 3:55 PM
NEW YORK -- Oil prices climbed Monday as energy experts warned that Libya's oil exports could be off the world market longer than expected, and countries including the U.S. enforced a no-fly zone over Libya.
Traders also fretted about other uprisings in the Middle East and how much they could affect production from OPEC heavyweights, Saudi Arabia and Iran. Those two countries produce 12.4 million barrels of oil per day.
Benchmark West Texas crude for May delivery gained $1.24 to settle at $103.09 per barrel on the New York Mercantile Exchange. The April contract, which ends Tuesday, rose $1.26 to settle at $102.33 per barrel.
Prices climbed after another violent weekend in Libya. Moammar Gadhafi vowed a "long war" as allied forces smashed his air defenses. On Monday, a top French official said international intervention could last "a while."
Oil traders said they are increasingly concerned about political stability in North Africa and the Middle East, which produces 27 percent of the world's oil. The Libyan uprising has essentially halted that country's exports, and experts said it's unclear when oil shipments will resume. "Markets hate uncertainty," analyst and trader Stephen Schork said. "Could this be a protracted no-fly zone like the one we saw in Iraq" following the Persian Gulf War?
Protests have also rocked Yemen, Bahrain and Syria.
Analyst Jim Ritterbusch said he expects oil prices will swing up and down this week as traders react to headlines out of the Middle East. "You could draw up 50 different scenarios for what could unfold over there," Ritterbusch said.
On Monday, some key developments sent ripples through energy markets.
-Bahrain's king praised foreign army units from Saudi Arabia, the United Arab Emirates and other Persian Gulf states that have come to support his regime. He also indirectly accused Iran of encouraging protests against him.
-In Yemen, three senior army commanders defected and joined a pro-democracy movement that wants the U.S.-backed president to step down.
-Protesters marched in Syria, chanting "No more fear!" after a deadly clash with riot police.
Meanwhile analysts said Japan will increase imports of oil and gas to replace power lost from nuclear reactors damaged in the massive earthquake and tsunami that struck that country. Three of six idled oil refineries also were back online last week, according to Platts, the energy information arm of McGraw-Hill Cos.
In the U.S., gas pump prices leveled off after jumping to the highest levels in history for this time of year. Retail prices ticked higher by a tenth of a penny on Monday to a national average of $3.549 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is still 38.6 cents higher than it was a month ago and 72.9 cents more than it was last year.
In other Nymex trading for April contracts, heating oil gained 2.82 cents to settle at $3.0525 per gallon and gasoline futures added 4.8 cents to settle at $2.9974 per gallon. Natural gas lost less than a penny to settle at $4.161 per 1,000 cubic feet.
In London, Brent crude rose $1.14 to settle at $114.91 per barrel.