Futures gained after protesters in Bahrain called for the fall of the government as unrest in the Middle East spread to Libya, where 20 were reported dead in clashes. Oil in New York also gained as the dollar declined against the euro, enhancing the appeal of commodities price in the U.S. currency.
“We suspect that the markets will be fairly well-bid heading into the weekend, as developments in the Middle East should prevent aggressive short positions from building up,” Edward Meir, senior commodity analyst at MF Global, wrote in a note today.
Crude for March delivery on the New York Mercantile Exchange was up 35 cents at $86.71 a barrel at 1:19 p.m. London time. The contract, which expires Feb. 22, has risen 1.3 percent this week. The more active April contract was up 62 cents at $89.46 a barrel.
Brent crude for April settlement was down 35 cents at $102.24 on the ICE Futures Europe exchange in London. The contract has risen 0.8 percent this week, its fourth consecutive increase. The dollar slipped to $1.3633 against the euro, after trading as high as $1.3546.
Middle East Tensions
Demonstrators in Libya, Africa’s biggest holder of crude oil reserves and ruled by Muammar Qaddafi for more than 40 years, yesterday demanded the government’s overthrow.
At least 20 people were reported killed in confrontations with security forces as violence broke out during marches yesterday in five Libyan cities, according to the Associated Press, which cited an opposition website and an anti-Qaddafi activist. The past week has also seen anti-government protests in Yemen, a producer of liquefied natural gas.
“Two potential triggers for the next move higher would be an Israeli response to the Iranian warship movement or escalation of the situation in Libya,” Filip Petersson, commodity strategist of Stockholm-based consultants SEB Commodity Research said in a note today.
Countries in the Middle East and North Africa were responsible for 36 percent of global oil production and held 61 percent of proved reserves in 2009, according to statistics compiled by BP Plc.
Further Increase Possible
A glut of oil at Cushing, Oklahoma, the delivery point for the U.S. futures, has weighed on New York prices relative to Brent. The difference between April contracts in London and New York was $13.88 a barrel today, compared with $13.75 yesterday.
Oil supplies at Cushing jumped to a record 38.3 million barrels in the week ended Jan. 28. Inventories were at 37.7 million in the seven days through Feb. 11, according to Energy Department data.
Prices may increase next week as mounting Middle East tensions bolster the risk of a disruption of shipments from the region, a Bloomberg News survey showed. Twenty of 46 analysts, or 43 percent, forecast crude oil will rise through Feb. 25. Fifteen respondents, or 33 percent, predicted prices will decline and 11 estimated little change. Last week, 48 percent said futures would decrease.
Traders may reduce their futures positions before the public holiday in the U.S. on Feb. 21 and next week’s International Petroleum industry gathering in London, said Olivier Jakob, managing director of Switzerland-based researcher Petromatrix GmbH.
“Monday will as well be a long weekend and next week traders will be traveling to London for IP week,” he said. “Some book-squaring is likely at the end of the day.”
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