Oil gained for a second day in New York after turmoil that has cut Libya’s output spread to Oman, raising concern Middle East production may be disrupted further.
Futures posted the biggest weekly gain in two years last week amid estimates that Libya’s crude flow was cut by as much as two-thirds. In Oman, two demonstrators were killed and several wounded in clashes with police earlier yesterday, according to hospital and government officials. The country is the largest Middle East oil producer that isn’t a member of the Organization of Petroleum Exporting Countries.
“When we look around the region we are seeing more visual concerns that unrest is continuing,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “There’s a little bit of fear in the markets.”
Crude for April delivery rose as much as $2.08, or 2.1 percent, to $99.96 a barrel in electronic trading on the New York Mercantile Exchange, and was at $99.15 at 4:18 p.m. Singapore time. The contract increased 60 cents, or 0.6 percent, to $97.88 on Feb. 25. Prices rose 14 percent last week, the biggest gain since the five days ended Feb. 27, 2009.
Oil rose to $103.41 a barrel on Feb. 24, the highest intraday price since Sept. 29, 2008. New York crude’s gains have lagged London’s Brent oil, widening the difference between April contracts to $14.22 today, from $10.36 on Feb. 21, according to data compiled by Bloomberg.
Brent crude for April settlement gained as much as $2.36, or 2.1 percent, to $114.50 a barrel on the London-based ICE Futures Europe exchange. The contract rose 78 cents, or 0.7 percent, to $112.14 on Feb. 25.
The unrest that has swept the Middle East, ignited by the ouster of Tunisia’s president and the fall of Egyptian President Hosni Mubarak, has spread to Oman.
Hundreds of Omanis, many unemployed, gathered at a sit-in for a second day in the city of Sohar, refusing to go home after a pledge by the nation’s ruler to provide jobs.
Oman, with a population of about 2.7 million Omanis and 600,000 expatriates, produced 885,600 barrels of oil a day in January, according to data reported by the state-run Oman News Agency yesterday. China is the nation’s biggest customer for crude, taking about 40 percent of its exports, according to data compiled by Bloomberg.
Libya, pumped 1.6 million barrels of oil a day in January, making it the ninth-largest producer among the 12 members of the Organization of Petroleum Exporting Countries. It ships most of its crude and fuels to Europe.
“Geopolitical risk has been on the rise in global oil markets since the end of January but has risen substantially over the past week following events in Libya,” Michael Lewis, the London-based head of commodities research at Deutsche Bank AG, said in a report on Feb. 25.
OPEC members, along with producers outside the group, can compensate for any halt in crude shipments from Libya, Qatari Oil Minister Mohammed Saleh Al Sada said yesterday.
The funds and other large speculators increased net-long positions, or wagers on rising prices, by 30 percent in the seven days ended Feb. 22 to 240,572 futures and options combined, the highest in records dating back to June 2006, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report.
Oil shipments from Libya’s rebel-controlled eastern territory may have resumed, the Wall Street Journal reported, citing Hassan Bulifa, a member of Arabian Gulf Oil Co.’s management committee.
A tanker carrying 700,000 barrels of crude was expected to depart yesterday from Tobruk in northeast Libya, Bulifa was quoted as saying. The tanker may be bound for China, he said.
Arabian Gulf Oil is Libya’s largest oil producer and the only oil company based in the country’s opposition-controlled eastern territory, the Journal said.
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