Gas, oil prices spike again

March 4, 2011 5:38:08 AM PST
Oil prices rose to near $103 a barrel Friday as Libyan government and rebel forces dug in amid fierce fighting while protests restarted in the capital Tripoli, raising investor fears of protracted oil output cuts.

By early afternoon in Europe, benchmark crude for April delivery was up 82 cents at $102.73 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 32 cents to settle at $101.91 on Thursday.

In London, Brent crude for April delivery was up 86 cents to $115.65 a barrel on the ICE Futures exchange.

Analysts said Thursday's fall was due to mainly to profit taking. "But the Libya crisis is still keeping physical markets highly volatile," said a report from JBC Energy in Vienna.

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.

On Friday, protesters renewed marches in Tripoli, the Libyan capital, calling for Gadhafi's ouster. Last week, similar protests were met by a brutal crackdown.

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 stabilize 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 U.S. Labor Department later 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 1.98 cents to $3.0691 a gallon and gasoline gained 1.06 cents to $3.0368 a gallon. Natural gas futures were down 3.7 cents at $3.741 per 1,000 cubic feet.

Alex Kennedy in Singapore contributed to this report.