Oil traded near a two-week high in New York as continued fighting in Libya fanned concern that unrest in the Middle East will further disrupt supply.
Futures on the New York Mercantile Exchange, at about $105 a barrel today, are heading for their first weekly gain in three weeks as Allied warplanes renewed strikes against ground forces loyal to Libyan leader Muammar Qaddafi. JPMorgan Chase & Co. raised its forecast for London-traded Brent crude to $118 a barrel, citing the conflict in North Africa in a report today.
“So long as ongoing problems in the Middle East continue to elevate risks of a further supply disruption, there is a strong likelihood of a price spike in the second quarter as the market demands additional oil to meet summer demand,” JPMorgan analysts led by New York-based Lawrence Eagles said.
Crude for May delivery on the New York Mercantile Exchange was up 6 cents at $105.66 a barrel at 12:30 p.m. London time. It earlier climbed to $105.88. Brent crude for May settlement slipped 13 cents to $115.59 a barrel on the ICE Futures Europe exchange in London, after settling yesterday at the highest since March 9.
New York prices have climbed 4.5 percent this week, the first gain in three, and are up 31 percent from a year earlier. The commodity rose to a 2 1/2-year high of $106.95 on March 7.
Brent will average $118 a barrel in the second quarter because of export halts in Libya, JPMorgan said in its monthly report. Prices may “spend some time” above $120 and reach as high as $130, according to the second-largest U.S. bank. Futures last traded at that level in July 2008.
New York crude has rallied 25 percent since protests began Feb. 15 in Libya, a member of the Organization of Petroleum Exporting Countries. The conflict is the bloodiest in a wave of uprisings that has toppled the presidents of Tunisia and Egypt and spread to Algeria, Bahrain, Iran, Oman, Syria and Yemen.
Yemen’s strengthening opposition movement plans to march to the Presidential Palace today and hold nationwide protests as government supporters pour into Sana’a, the capital, for a rally dubbed “Tolerance Friday.”
Libya’s crude exports may be curbed for months due to sanctions and damage to production facilities, the International Energy Agency said March 15. The country is the third-biggest producer in Africa and holds the continent’s largest reserves.
Shipments from OPEC will drop to the lowest since October because of Libya’s civil war, according to tanker-tracker Oil Movements in Halifax, England. The producers’ group, which pumps 40 percent of the world’s crude, may raise official output targets at its next meeting June 8, said David Kirsch, an analyst at PFC Energy, a consultant in Kansas City.
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