Oil still high as Libyan conflict mounts

2011-03-04 09:45

Singapore - Oil prices hovered near $102 a barrel on Friday in Asia as Libyan government and rebel forces dug in amid fierce fighting, raising investor fears of protracted oil output cuts in the Opec nation.

Benchmark crude for April delivery was down 2c at $101.89 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract added 32c to settle at $101.91 on Thursday.

In London, Brent crude for April delivery was up 11c to $114.90 a barrel on the ICE Futures exchange.

On Thursday, rebels bolstered defenses around Libya's second-largest oil refinery in Brega while government fighter jets bombed nearby the Mediterranean port city. Libyan leader Moammar Gadhafi's regime apparently has stepped up its recruitment of mercenaries from other African countries, with an official in neighboring Mali saying that 200 to 300 men have left for Libya in the last week.

President Barack Obama reiterated calls for Gadhafi, who has been in power for 41 years, to resign and leave the country.

Analysts say oil prices could stabilise if the political upheaval that has swept through North Africa and the Middle East doesn't spread to other crude-producing countries. About 1 million barrels a day of Libya's 1.6 million capacity has been shut down because of the crisis.

"As long as it does not spread to the UAE, Kuwait, Qatar or Saudi Arabia or worsen in Bahrain, Yemen or Iran, oil supplies from Saudi Arabia and Kuwait should be able to make up shortfalls in Libya," Cameron Hanover said in a report.

Traders will also be closely watching the February jobs data due to be released by the US Labour Department later on Friday. Analysts are forecasting the economy added about 175 000 jobs last month as the economy slowly recovers from the 2009 recession.

In other Nymex trading in April contracts, heating oil rose 0.2c to $3.05 a gallon and gasoline gained 0.6c to $3.03 a gallon. Natural gas futures were down 0.1c at $3.77 per 1 000 cubic feet.