Oil near $112 as attacks damage Libyan oil fields

Oil near $112 as attacks damage Libyan oil fields

Oil prices jumped to near $112 a barrel Friday as fighting in Libya damaged oil fields in the OPEC nation and a weaker dollar made commodities cheaper for investors with other currencies.

By early afternoon in Europe, benchmark crude for May delivery was up $1.56 at $111.86 a barrel, the highest since September 2008, in electronic trading on the New York Mercantile Exchange. The contract rose $1.47 to settle at $110.30 on Thursday.

In London, Brent crude for May delivery was up $2.05 to $124.72 a barrel on the ICE Futures exchange.

The large spread between the Nymex and Brent contract has been attributed to Europe's higher perceived exposure to the scarcity of Libyan oil exports and the high U.S. stockpiles of crude and gasoline.

Crude output in Libya slowed to a trickle this week as forces loyal to Moammar Gadhafi attacked the country's largest oil field in the rebel-controlled east, rebels said. Most of Libya's 1.6 million barrels a day of crude production had already been shut down by nearly two months of fighting.

"The biggest driver of the further increase in oil prices is a growing perception in the market that the conflict in Libya might not end anytime soon," said a report from KBC Energy Economics in Britain.

Rebels were able to sell a shipment of 1 million barrels Wednesday but damage to their oil fields has all but halted production. Output in the government-held west has collapsed as sanctions target Libyan state oil activities.

"Traders have been worried that a dragged-out civil war might ultimately damage or destroy Libyan oil installations," Cameron Hanover said in a report.

A weaker dollar also boosted oil prices since that makes dollar-based commodities such as crude cheaper for traders with other currencies. The euro rose to $1.4416 on Friday from $1.4306 late Thursday.

Analysts, meanwhile, noted demand could drop as oil prices climb above what many consumers can afford.

"The price of oil should rise further in the short term, though the risk of demand weakening also increases at the same time," said analysts at Commerzbank in Frankfurt. "We do not believe the rise in oil prices is lasting and expect lower prices in the course of the year."

Portugal's decision to finally request a bailout from the EU and the IMF was welcomed by markets, while serving as a reminder of the financial struggles facing the continent and their stifling effects on oil demand.

"Not only will Europe's ongoing debt problems and the European Central Bank's decision to hike interest rates for the first time since 2008 understandably dampen European consumers' appetite for oil, but also the persistently inflated level of oil prices will increasingly deter all but the most robust consumption trends," KBC said.

In other Nymex trading in May contracts, heating oil rose 5.07 cents to $3.2567 a gallon and gasoline gained 3.82 cents to $3.2247 a gallon. Natural gas futures were down 1.6 cents at $4.041 per 1,000 cubic feet.

oil prices soring, a third war, government on the verge of a shutdown, and more partisan than ever, troops being extended in iraq. do you get the feeling the 0bama administration is spiraling down to a firey crash?

through it all my solar system produces free, clean energy every day. Makes you wonder if our focus is wrong

I cant wait to vote against him..

Lady Snipe Dragon wrote:

I cant wait to vote against him..

i can't wait till the majority of us vote against him in 2012

And who will you two vote for...

Batshit Crazy Bachmann
Failing Pailin
Lieing Newt
Holier than thou Huckleberry
....and the list goes on and on.

LMFAO...one is worse than the other. But then again all you Repugs are fucking crazy!

Angelica wrote:

And who will you two vote for...

Batshit Crazy Bachmann
Failing Pailin
Lieing Newt
Holier than thou Huckleberry
....and the list goes on and on.

LMFAO...one is worse than the other. But then again all you Repugs are fucking crazy!

I'd take anyone of them over the disaster we have now. I have never seen such an abortion in the oval office. I swear this joker makes bush look like a genius. the honorable President has had everyone of his lies thrown right back in his face. It's like Karma has come out to bite him in the ass for being such a bullshitter.