This was published 15 years ago
Oil surges to 29-month high on political turmoil
Oil surged to the highest in 29 months in New York as unrest in Libya renewed concern supply disruptions may spread while signs of US economic recovery stoked speculation fuel demand will rise.
Futures gained as much as 1.4 per cent after fighting between Libyan rebels and troops loyal to Muammar Qaddafi intensified. Citigroup Inc. raised its Brent crude estimate as the threat of output disruptions supports a “fear premium.” Prices closed 6.7 per cent higher last week after a US government report showed the nation's jobless rate fell in February to the lowest since April 2009.
“It's still very much a Middle Eastern story,” said Ben Westmore, a minerals and energy economist at National Australia Bank in Melbourne. “The market was pretty pleased with the US non-farm payroll numbers, which shows some improvement in the labor market.”
Crude for April delivery increased as much as $US1.50 to $US105.92 a barrel in electronic trading on the New York Mercantile Exchange, the highest intraday price since September 29, 2008. The contract was at $US105.73 at 10:33 a.m. Singapore time.
Futures have risen 29 per cent from a year earlier.
Brent crude for April settlement gained 95 cents, or 0.8 per cent, to $US116.92 a barrel on the London-based ICE Futures Europe exchange. The contract jumped 3.4 per cent last week, the sixth weekly increase.
Saudi Arabia
Citigroup raised its Brent price estimate for 2011 to $US105 a barrel from $US90 and increased the estimate for 2012 to $US100 from $90.
Violence in Libya has cut output in the North African country by as much as 1 million barrels a day, according to the International Energy Agency. Libya pumped 1.59 million barrels a day in January, Bloomberg News estimates show.
Demonstrations have toppled leaders in Tunisia and Egypt, while there have been protests in countries including Iran, Yemen and Oman. In Saudi Arabia, the biggest oil producer in the Organization of Petroleum Exporting Countries, websites have called for a nationwide “Day of Rage” on March 11 and March 20, according to Human Rights Watch.
“We're hearing increasing calls for protest in Saudi Arabia, which is the big, great threat hanging over the oil market at the moment,” National Australia Bank's Westmore said. “You couple the supply risks in the Middle East with some more positive demand data from the developed world and it's not surprising that you see the oil price push higher.”
US economy
The turmoil in the Middle East also pushed oil products prices higher. Gasoline for April delivery gained 1.59 cents, or 0.5 per cent, to $US3.0623 a gallon on the New York Mercantile Exchange. Prices advanced 11 per cent last week.
US payrolls rose 192,000 in February compared with the 196,000 median estimate of economists surveyed by Bloomberg News, Labor Department figures showed March 4. Employment climbed in manufacturing, construction and temporary help agencies, while state and local government payrolls fell.
The unemployment rate was forecast to increase to 9.1 per cent, according to the median of responses in a Bloomberg News survey of economists. The U.S. is the biggest oil-consuming country, responsible for 22 per cent of global demand in 2009, according to BP Plc, which publishes its BP Statistical Review of World Energy each June.