Yahoo Finance
Oil eases below $111 on Saudi assurances, all eyes on Libya
Traders work in the oil options pit on the floor of the New York Mercantile Exchange in New York City, February 22, 2011. REUTERS/Brendan McDermid
On Thursday February 24, 2011, 10:43 pm EST
By Randy Fabi
SINGAPORE (Reuters) - Oil eased below $111 on Friday as top world exporter Saudi Arabia sought to assure key importers it would fill any supply shortfall left by beleaguered fellow OPEC member Libya, soothing fears over a disruption in supplies that had carried prices to a 2-1/2-year high a day earlier.
Unrest in the oil-rich desert nation has slashed a big chunk of Libya's output of 1.6 million barrels per day, with estimates of capacity shut down ranging from 500,000 to 1.2 million bpd.
Brent crude for April delivery eased 79 cents to $110.57 a barrel by 0233 GMT, after climbing to a 2-1/2-year high of $119.79 the previous session before settling at $111.36.
U.S. crude traded 63 cents lower at $96.65, after surging as high as $103.41 on Thursday, the highest since September 2008.
"Even though prices have receded, the market remains on edge," said Victor Shum, an analyst with energy consultancy Purvin & Gertz.
"Anxiety and concerns about the people's revolt spreading to other parts of the Middle East and North Africa continue to support the markets."
Prices fluctuated more than $10 in whipsaw trading on Thursday, the widest trading range since September 2008, as the market reacted to rapidly unfolding events in Libya.
"When geopolitics in the Middle East are at play in the oil markets, all conventional bets on the direction of oil prices based on supply and demand fundamentals, or economic variables, are off," analysts at BNP Paribas said in a research note.
Reuters market analyst Wang Tao said technical charts showed Brent would recover to $113 a barrel in the next day or two on a steady climb to as high as $158 this year.
EYES ON LIBYA
Forces loyal to Muammar Gaddafi hit back at rebels holding towns near the Libyan capital on Thursday but there was no sign they had broken the momentum of the opposition gains.
The International Energy Agency estimated the unrest has cut 500,000 to 750,000 bpd of Libyan output. Italian oil company ENI, the biggest foreign operator, estimated 1.2 million bpd had been shut down as international firms pull out workers.
With a spike in oil prices threatening the global economic recovery, the IEA called on OPEC to draw on excess oil production capacity if required to counter Libyan supply losses.
Saudi Arabia was in talks with European companies affected by the disruption in Libyan supply and was willing and able to plug any gaps in supply, senior Saudi sources said on Thursday.
The Saudi sources said the country was able to pump more of the kind of high-quality crude produced by Libya and it could be shipped quickly to Europe with the help of a pipeline that crosses the kingdom. |
Costa Rica Electricity Price News