Oil settles at 2-1/2 year high on Libya violence

By Reuters
Posted March 2 at 3:25 p.m.

Oil rose to settle at its highest level since August 2008 Wednesday after an airstrike near Libya’s oil infrastructure raised more fears the OPEC nation’s oil sector could become a target in embattled leader Muammar Gaddafi’s efforts to hold power.

News of the strike in Brega, about kilometers (1.2 miles) from a Libyan oil terminal, added to two weeks of fears the unrest could spill over into other large oil producers in the region.

Oil markets remained focused on the turmoil in the Middle East, which could signal another threat to global oil supplies after the Libyan revolt cut exports.

“It looks like an attack fairly close to what is one of Libya’s largest storage and export terminals,” said Andy Lebow, trader at MF Global in New York.

“It’s hard to say if the Libyan government is trying to target oil infrastructure in the east or whether they’re just targeting rebel-held areas, but the market’s reacting to this threat either way.”

Brent crude settled 93 cents higher at $116.35 a barrel, the highest settlement since Aug. 21, 2008, off the session high of $117.81. The Libyan crisis spurred Brent to a 2-1/2 year high near $120 a barrel on Feb. 24.

U.S. crude futures settled at $102.23 a barrel, up $2.60, ending above $100 for the first time since September 2008. U.S. oil also found some support from U.S. Energy Information Administration data showing a drawdown in U.S. oil inventories.

Crude had pared gains in the morning after EIA data showed inventories at the Cushing, Oklahoma, delivery point for the New York Mercantile Exchange’s oil futures contract hit a record high.

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One comment:

  1. Kevin Jordan March 2 at 4:44 pm

    Wow, this situation just seems to get worse and worse. It is hard to imagine this not turning very ugly soon. The U.S. had better stay out and leave this alone. We are already hated enough in this part of the world. Our involvemen­t will taint the new government and create more enemies.

    Take a look at this very interestin­g infographi­c that provides an overview of Libya, its economy, and the developmen­ts so far..