• Sars Wars returns

    Allan Greenblo looks at the leadership concerns around the 'Twin Peaks' regulatory model.

  • Inside Labour

    When unions later this year start to demand double digit pay rises, don't be surprised, says Terry Bell.

  • Anti-nuclear group

    ANC general secretary Gwede Mantashe rebukes those who feel SA can't afford nuclear power.

All data is delayed
See More

Libyan turmoil pushes oil price higher

Feb 21 2011 12:07
London - The price of Brent crude surged to a fresh two-and-a-half year high as investors were spooked by growing violence in major oil producer Libya.

Global stocks were slightly higher, with emerging markets down and European shares flat. US markets were closed for a national holiday.

Protests broke out in the Libyan capital Tripoli for the first time following days of unrest in the city of Benghazi. Some army units defected to the opposition, in what has become one of the bloodiest revolts to convulse the Arab world.

Financial markets are particularly sensitive to the violence in Libya because it exports about 1.1 million barrels per day of crude.

On Monday Brent oil was up $1.90 a barrel at $104.44, having earlier risen to a new high of $104.60.

"There is uncertainty about supplies. Markets don't like uncertainty," said Bernard McAlinden, an investment strategist at NCB Stockbrokers.

Meanwhile, rising oil prices feed into inflation, one of the main current concerns of investors who are in a generally bullish mood on expectations that global economic recovery is now sustainable.

One result was to weaken equities. MSCI's emerging market benchmark was down 0.1% on the day.

The FTSEurofirst 300 was flat, off its opening lows after eurozone manufacturing data came in above consensus. Ifo sentiment data out of Germany was also above forecast.

European stocks, however, have been hit by mixed earnings. Thomson Reuters Proprietary Research reported on Monday that the number of European companies missing fourth-quarter expectations is outpacing those beating them.

The earnings growth rate, actual and predicted, for the STOXX 600 is 18.9%, compared with a December estimate of 36.1%.

Brewer Carlsberg, for example, fell on Monday after posting a surprise fall in fourth-quarter operating profit.

Strong euro

The euro was firm, having hit its highest level in more than 10 days against a background of hawkish comments from European Central Bank (ECB) officials. These added to expectations that a rise in interest rates is on the way this year.

The common currency was trading at $1.3705, up 0.1% on the day. It rose to $1.3727 earlier in the session, the highest since February 10, extending a rise on Friday that was also related to comments from an ECB executive board member.

With an upcoming Irish election on Friday likely to see a party which is openly calling for a renegotiation of its EU bailout agreement come to power, strategists say there is a risk that the euro could come under pressure.

Eurozone policymakers are also struggling towards a more comprehensive package they hope can put an end to debt troubles.

"With neither the core nor the periphery signalling willingness to find a compromise on the issues for now, the chances are that potential political impasses could erode euro sentiment going forward," said Valentin Marinov, strategist at Citi FX.

Core eurozone bond yields were lower as investors sought caution in the face of events in the Middle East and North Africa. 
libya  |  commodities  |  markets  |  oil


Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about:


Marketing is a big concern in SA's small business community, followed by a lack of confidence and partnering with the wrong people, according to a survey.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

The regulation of WhatsApp and other OTTs is:

Previous results · Suggest a vote