Oil price extends gains

2011-03-01 09:26

Singapore - Crude prices were higher in Asian trade on Tuesday despite oil kingpin Saudi Arabia's pledge to ensure sufficient supplies.

New York's benchmark West Texas Intermediate contract for April delivery rose 46c to $97.43 and Brent North Sea crude for April delivery was up 59c at $112.39 in the afternoon.

Fears about supply disruption due to a wave of unrest in Libya and other countries in the oil-rich Middle East sent Brent soaring close to $120 last week.

Saudi Arabia, Opec's largest producer, said on Monday it was committed to the stability of the oil market after Libya's crude production dropped due to the unrest there.

The Saudi government, in a statement carried by the state-run SPA news agency, said the cabinet had met and discussed the anti-regime protests shaking Libya "and their repercussion on oil production in that country".

Saudi Arabia "is committed to the stability of the market" and to ensuring that oil supplies remain available, the statement said, adding that the kingdom hopes Libya's production returns to normal soon.

But Chen Xin Yi, commodities analyst for Barclays Capital, said: "While news that Saudi Arabia is increasing its crude output to more than nine million barrels per day... helped ease concerns about short term supply, the crude oil produced is not an exact substitute for Libyan's crude."

Libya produces a light, sweet crude highly prized by the market.

Libya's opposition forces, in control of the country's major oil installations, said on Monday they were resuming oil exports, with the expected departure of a tanker for China.

It will be the first cargo of crude to sail from Libya since February 19, after security forces began a crackdown on anti-regime protesters in the east.

On February 22, Saudi Oil Minister Ali al-Naimi said Riyadh would compensate for any oil supply problems caused by unrest in the Middle East, but added there was no current shortage.

Saudi Arabia pumps around 8.4 million barrels of oil per day, but Naimi said the kingdom still has a spare capacity of another four million.