Oil Rises to 30-Month High on Libya Conflct; Kuwait Says Price Is Too High
Oil climbed to the highest level in 30 months in New York on speculation that U.S. economic growth may support demand and a protracted conflict in Libya will curtail supply.
Futures advanced a third day after an April 1 report showed the U.S., the world’s largest crude consumer, added more jobs than economists forecast last month. Prices are too high and “worrying,” the chief executive officer of Kuwait Petroleum Corp. said today. Forces loyal to Libyan leader Muammar Qaddafi bombed an oil field south of the city of Ajdabiya, Al Jazeera television reported, heightening concern output losses from Africa’s third-largest producer may continue.
“It’s becoming increasingly clear that the situation in Libya may be prolonged,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “The more one looks at uprisings in the Middle East, the more one realizes they will not be easy to resolve. At the same time, oil demand is relatively inelastic to higher prices.”
Crude for May delivery gained as much as 84 cents, or 0.8 percent to $108.78 a barrel in electronic trading on the New York Mercantile Exchange, the highest since Sept. 24, 2008, and was at $108.16 at 1:39 p.m. London time. Prices are up 25 percent from a year ago.
Brent oil for May settlement rose as much as $1.05, or 0.9 percent, to $119.75 a barrel on the London-based ICE Futures Europe exchange. The contract climbed 2.7 percent last week.
U.S. Jobs Growth
The European benchmark traded at a premium of $11.25 a barrel over U.S.-traded West Texas Intermediate. The difference between front-month contracts in London and New York surged to a record $19.54 on Feb. 21 as unrest spread in the Middle East and North Africa and stockpiles climbed at Cushing, Oklahoma, the delivery point for WTI. The gap averaged 76 cents last year.
Kuwait would prefer to see oil prices at $90 to $100 a barrel, Kuwait Petroleum CEO Farouk Al-Zanki said at a conference in Kuwait City.
Prices gained 2.4 percent in New York last week as fighting in Libya between rebels and forces loyal to threatened to prolong supply cuts from Africa’s third-largest producer.
U.S. payrolls advanced by 216,000 workers in March compared with a 190,000 gain projected by economists in a Bloomberg News survey. The jobless rate dropped to 8.8 percent from 8.9 percent, the fourth straight decrease, the Labor Department said. The unemployment rate was projected to hold at 8.9 percent, according to the median forecast in the survey.
“The U.S. data paints a positive picture,” Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney, said by telephone today. “People are still concerned about Libya, but not overly. If Qaddafi decides to call it a day, then there will be a short, sharp sell-off.”
Oil in New York has climbed 28 percent since anti- government protests began Feb. 15 in Libya, cutting the nation’s output by two-thirds. The conflict is the bloodiest in uprisings that have toppled the presidents of Tunisia and Egypt and spread to Bahrain, Iran, Yemen and Oman.
An emissary ofQaddafi met with Greece’s prime minister yesterday and may be seeking a political or diplomatic solution to hostilities, according to Greek Foreign Minister Dimitris Droutsas.
“Upcoming elections in Nigeria amid the intensified unrest” in the Middle East and North Africa region may add to concern over oil supplies, Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in an e-mailed note.
Long Positions Increase
Nigeria, Africa’s biggest oil producer, will hold general elections a week later than planned, the electoral commission said, after a vote to elect lawmakers ended in chaos on April 2.
Parliamentary elections, which had been rescheduled to start today, will take place on April 9, while the presidential vote is set for April 16, Attahiru Jega, head of the Independent National Electoral Commission, said yesterday.
Nigeria pumped 1.92 million barrels a day in March, according to estimates compiled by Bloomberg News. Saudi Arabia, the largest producer in the Organization of Petroleum Exporting Countries, pumped 9 million barrels a day.
Net-long positions in oil, or bets that prices will rise, increased by 5,254 futures and options combined, or 1.8 percent, to 292,066 in the seven days ended March 29, the Commodity Futures Trading Commission’s weekly Commitments of Traders report released at the end of last week.
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