Crude Oil Climbs a Fourth Day as Middle East Violence Escalates
Crude oil gained for a fourth day in New York, the longest rising streak since December, as escalating violence in the Middle East and Africa threatened to prolong supply disruptions.
Futures advanced as much as 0.7 percent after Syrian security forces stormed the city of Daraa, killing at least five people, while unrest in Yemen showed no sign of ending. U.S. Senator John McCain said rebels in Libya need more assistance in the fight against Muammar Qaddafi’s forces. Saudi Arabia, holder of the world’s largest crude reserves, has no plans to raise production capacity, a Saudi oil official said.
“The main support is coming from geopolitical developments in the Middle East and North Africa,” analysts at Vienna-based JBC Energy said in a report today. “The market remains fraught with uncertainty,” including worries about inflation and its possible impact on oil demand.
Oil for June delivery rose as much as 78 cents to $113.07 a barrel on the New York Mercantile Exchange. That’s the highest intraday price since April 11, when futures reached $113.46, the most since September 2008. The contract was at $112.77 at 12:13 p.m. in London.
Brent crude oil for June settlement increased 32 cents, or 0.3 percent, to $124.31 a barrel on the London-based ICE Futures Europe exchange. Most European countries have a public holiday today for Easter Monday.
Reports that Saudi Arabia may boost its output capacity to 15 million barrels a day from 12.5 million barrels a day aren’t true, the official said by telephone yesterday, declining to be identified by name because he isn’t authorized to speak publicly.
Political Changes
Oil has advanced 23 percent this year, stoked by turmoil in the Middle East and North Africa that has toppled leaders in Egypt and Tunisia and spread to Libya, Algeria, Bahrain, Iran, Oman, Syria and Yemen. Libyan crude output, which averaged 1.6 million barrels a day last year, fell to 390,000 barrels a day in March, according to a Bloomberg News survey.
Political strife in Nigeria, Africa’s largest producer and the fourth-biggest crude seller to the U.S., is also supporting prices above $100 a barrel, according to Ken Hasegawa, an energy trading manager at Newedge, a broker in Tokyo.
At least 500 people died in religious rioting that followed Nigeria’s presidential election, the Associated Press reported today. The country is scheduled to hold state governorship elections tomorrow.
Libya Violence
NATO is fighting a “losing battle” in Libya, Muammar Qaddafi’s son edsaid, state-run Jana news agency reported today. In Syria, 200 to 300 people have been detained since April 22, Mahmoud Merhi, who heads the Arab Organization for Human Rights, said in an interview from Damascus.
“The ongoing coordinated actions in Libya to remove Qaddafi, if that is the actual purpose, is adding to the nervousness, prompting new buying in crude oil,” John Caiazzo, president of Acuvest Commodity Brokers Inc. in Temecula, California, said in a report today. “Other producing areas experiencing turmoil include Yemen and Syria, where protesters are being killed as well.”
Yemeni President Ali Abdullah Saleh defied calls for him to resign immediately, saying he won’t hand power to “insurrectionists” as protesters clashed with security forces in the city of Taiz. Yemen shares a border with Saudi Arabia and ranks as the ninth-biggest crude producer in the Middle East, according to BP Plc.
Bullish Bets
Brent crude for June was at a premium of $11.49 a barrel to New York futures settling in the same month, Bloomberg data showed. The premium has shrunk $2.25 from a week earlier on signs that supplies are falling at Cushing, Oklahoma, the delivery point for West Texas Intermediate grade.
Bullish bets on crude climbed in the past week, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. Net-long positions in oil increased 8,337 futures and options combined, or 3 percent, to 289,916, according to the CFTC report.
U.S. crude inventories fell 2.32 million barrels to 357 million, the first drop since February, the Energy Department said April 21. Cushing stockpiles declined 770,000 barrels to 41 million barrels, the biggest drop since April 2.
To contact the reporter on this story: {Ann Koh} in Singapore at akoh15@bloomberg.net; Ayesha Daya in Dubai at adaya1@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
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