Crude Oil Gains as Libya Violence Intensifies; UBS Raises Brent Forecast
Futures advanced as much as 1.1 percent after the U.S. signaled it favored allowing foreign intervention against Libyan leader Muammar Qaddafi’s forces. UBS AG raised its 2011 Brent crude forecast because of the turmoil. Oil climbed yesterday on concern violence in Bahrain will spill into Saudi Arabia while prices dropped earlier today on speculation Japan’s earthquake will curb demand.
“Tension in Libya and Bahrain is good support for the crude oil market,” said Ken Hasegawa, an energy trading manager at broker Newedge in Tokyo. “We still have some risk coming out of the Middle East.”
Crude for April delivery rose as much as $1.11 to $99.09 a barrel in electronic trading on the New York Mercantile Exchange, and was at $98.88 at 4:32 p.m. Singapore time. Yesterday, the contract climbed 80 cents, or 0.8 percent, to $97.98. Prices are 18 percent higher than a year ago.
Brent crude for May settlement advanced $1.09, or 1 percent, $111.69 a barrel on the London-based ICE Futures Europe exchange. The April contract rose $2.10, or 1.9 percent, to $110.62 yesterday, when it expired.
Gasoline futures for April gained 1.4 cents in New York to $2.8580 a gallon.
UBS raised its Brent crude projection to $103.75 a barrel from $85, analysts led by Melbourne-based Gordon Ramsay said in a report dated yesterday. The bank increased its 2012 estimate by 12 percent to $95.
“We are discussing very seriously and leading efforts in the Security Council over a range of actions that we believe could be effective in protecting civilians,” U.S. Ambassador Susan Rice told reporters yesterday after more than seven hours of negotiations on a draft resolution presented by the U.K., France and Lebanon.
The U.S. suggested the addition of a provision allowing foreign forces to halt “attacks by air, land and sea forces” loyal to Libyan leader Muammar Qaddafi.
Regional unrest, which has cut Libya’s crude production by 1 million barrels a day and toppled the leaders of Tunisia and Egypt, has reached Saudi Arabia’s neighbors Yemen, Oman and Bahrain, the island-kingdom where a Sunni family rules the majority Shiite population.
Bahrain yesterday declared a three-month state of emergency after troops from Saudi Arabia and other Gulf states arrived to help quell a month of protests driven by Shiites calling for democracy and civil rights.
The island nation is connected by a 25-mile long causeway to Saudi Arabia’s Eastern Province, the source of most Saudi oil production and home to many of its Shiite population.
Oil earlier fell as much as 1.4 percent as Tokyo Electric Power Co. workers struggled to contain radiation at a nuclear plant stricken after a magnitude 9 earthquake on March 11. The temblor, the largest ever recorded, has shut factories, refineries and power generators and may result in a 0.9 percent decrease in Japan’s gross domestic product this year, according to BNP Paribas SA.
“It’s still possible for oil to drop further based on the situation in Japan,” said Hasegawa. “Demand for crude will have to fall because the closure of several refineries. But on the other side we need more products imported because we can’t produce on our own.”
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