News / National
Brent climbs above $110 on Libya unrest
24 Feb 2011 at 00:28hrs | Views
Brent crude futures rallied above $110 a barrel on Wednesday, posting the biggest three-day percentage gain in a year, as the escalating violence in Libya could further reduce its production.
Between 300 000 and 400 000 barrels per day of Libyan output - up to 25% - has been shut down, according to Reuters calculations, marking the first cut in oil supplies related to the recent wave of anti-government unrest in North Africa and the Middle East.
After Libyan leader Muammar Gaddafi vowed in a defiant speech on Tuesday that he would not step down, promising severe punishment to his detractors, analysts fear that long-lasting supply disruptions or even permanent damage lies ahead for the OPEC member's oil industry.
Traders were intently watching what top OPEC exporter Saudi Arabia will do, even as its oil minister has reiterated assurances the kingdom and other OPEC members would be ready to act should a supply shortfall develop.
"I don't think Libya alone will take us to $150 a barrel, but, if unrest spreads in the Gulf countries, we could easily get there. That is why it is imperative the Saudis release some extra barrels into the market now to calm the situation, rather than simply trying to talk the price down," said Edward Meir, an analyst at MF Global in New York.
In London, ICE Brent crude for April delivery gained $4.01, or 3.8%, at $109.79 a barrel. Earlier, it touched a session high of $110.35, the highest since September 2, 2008, when prices hit $110.45.
In three days, the Brent contract has surged nearly $8, or 7.8%, the biggest three-day percentage advance since February 2010.
In New York, the new front-month, April crude rose $2.48, or 2.6%, to $97.90 a barrel. It earlier reached $98.07, the highest intraday price since October 2, 2008, when prices hit $100.37.
Since resuming trading on Tuesday, following a long holiday weekend, U.S. crude has advanced nearly $12, or nearly 14 percent, the biggest two-day percentage gain since January 2009.
Brent's premium against US crude widened to as much as $12.84, after posting $10.36 at the close on Tuesday.
Traders were gearing up for US weekly inventory data, the first of which will be released by the industry group American Petroleum Institute later Wednesday at 4:30 p.m. EST (2130 GMT).
A Reuters poll forecast that U.S. crude stockpiles rose 1.3 million barrels last week, while distillate inventories fell 1.4 million barrels and gasoline supplies rose 400,000 barrels.
Between 300 000 and 400 000 barrels per day of Libyan output - up to 25% - has been shut down, according to Reuters calculations, marking the first cut in oil supplies related to the recent wave of anti-government unrest in North Africa and the Middle East.
After Libyan leader Muammar Gaddafi vowed in a defiant speech on Tuesday that he would not step down, promising severe punishment to his detractors, analysts fear that long-lasting supply disruptions or even permanent damage lies ahead for the OPEC member's oil industry.
Traders were intently watching what top OPEC exporter Saudi Arabia will do, even as its oil minister has reiterated assurances the kingdom and other OPEC members would be ready to act should a supply shortfall develop.
"I don't think Libya alone will take us to $150 a barrel, but, if unrest spreads in the Gulf countries, we could easily get there. That is why it is imperative the Saudis release some extra barrels into the market now to calm the situation, rather than simply trying to talk the price down," said Edward Meir, an analyst at MF Global in New York.
In London, ICE Brent crude for April delivery gained $4.01, or 3.8%, at $109.79 a barrel. Earlier, it touched a session high of $110.35, the highest since September 2, 2008, when prices hit $110.45.
In three days, the Brent contract has surged nearly $8, or 7.8%, the biggest three-day percentage advance since February 2010.
In New York, the new front-month, April crude rose $2.48, or 2.6%, to $97.90 a barrel. It earlier reached $98.07, the highest intraday price since October 2, 2008, when prices hit $100.37.
Since resuming trading on Tuesday, following a long holiday weekend, U.S. crude has advanced nearly $12, or nearly 14 percent, the biggest two-day percentage gain since January 2009.
Brent's premium against US crude widened to as much as $12.84, after posting $10.36 at the close on Tuesday.
Traders were gearing up for US weekly inventory data, the first of which will be released by the industry group American Petroleum Institute later Wednesday at 4:30 p.m. EST (2130 GMT).
A Reuters poll forecast that U.S. crude stockpiles rose 1.3 million barrels last week, while distillate inventories fell 1.4 million barrels and gasoline supplies rose 400,000 barrels.
Source - Reuters
