Oil hovers above $105 amid Middle East conflict

The Associated Press
Thursday, March 24, 2011; 1:38 AM

SINGAPORE -- Oil prices hovered above $105 a barrel Thursday in Asia near a two-year high as traders closely watch an unprecedented wave of violent protests and uprisings in the crude-rich Arab world.

Benchmark crude for May delivery was down 26 cents to $105.47 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract added 78 cents to settle at $105.75 on Wednesday, the highest since Sept. 26, 2008.

In London, Brent crude was down 12 cents at $115.43 a barrel on the ICE futures exchange.

Oil has jumped 24 percent since Feb. 15 as violent conflict roils the Middle East and North Africa.

Israeli warplanes hit Hamas targets in Gaza early Thursday, retaliating for rocket attacks on Israeli cities and a bus stop bombing in Jerusalem a day earlier.

Coalition missiles strikes have pounded forces loyal to Libyan leader Moammar Gadhafi for five days, giving rebels breathing room to regroup. With Gadhafi refusing to step down and U.S. President Barrack Obama ruling out a land invasion, the conflict could face a stalemate that keeps most of the OPEC nation's 1.6 million barrels a day of crude production shut down longer than investors had initially anticipated.

In Syria, a crackdown on anti-government protests escalated Wednesday as police killed at least 15 demonstrators in the southern city of Daraa. Meanwhile, Yemen declared a 30-day state of emergency in a bid to quell an expanding uprising against the 32-year rule of President Ali Abdullah Saleh.

Crude prices were also supported by signs U.S. consumers aren't letting rising fuel costs crimp demand. The Energy Department said gasoline inventories fell 5.3 million barrels last week, and gasoline stocks are down 8.9 percent during the last five weeks.

"The bulls got themselves into a tizzy because of the reported draw in gasoline," energy consultant The Schork Group said.

In other Nymex trading for April contracts, heating oil fell 0.7 cents at $3.05 a gallon and gasoline dropped 0.6 cents to $3.02 a gallon. Natural gas added 0.6 cents to $4.34 per 1,000 cubic feet.

© 2011 The Associated Press