Oil prices continued to set new post-recession highs Monday as forces loyal to Moammar Gadhafi pounded rebels near a key oil port in Libya.
It’s unclear how long the country’s oil exports will be cut off, and traders prepared for a worst-case scenario in which world supplies would be under pressure for months.
Benchmark West Texas Inter-mediate crude for April delivery gained 52 cents at US$104.95 per barrel on the New York Mercantile Exchange.
The price almost hit US$107 per barrel earlier in electronic trading, the highest since September 26, 2008.
In London, Brent crude added 32 cents at US$116.29 per barrel.
The rise in oil is driving US gasolene prices to levels that weren’t expected for at least another month. Pump prices have jumped an average of 39 cents per gallon since the Libyan uprising began in mid-February, forcing motorists to pay an additional US$146 million per day for using the same amount of fuel. The national average hit US$3.509 per gallon on Monday, according to AAA, Wright Express and Oil Price Information Service.
Libya, which sits on the largest oil reserves in Africa, has been engulfed in a four-week rebellion as militants try to oust Gadhafi after 41 years in power. Officials in the country say oil fields continue to operate, but daily exports of 1.5 million barrels could be cut off for some time.
On Monday, Libyan warplanes launched more air-strikes on rebel positions around the Ras Lanouf oil port as forces loyal to Gadhafi tried to keep rebels from advancing on his stronghold in the capital, Tripoli.
Saudi Arabia has increased production to make up for the loss of Libyan crude, which goes mainly to Europe.
The Obama administration was also considering tapping the US strategic oil reserves of 727 million barrels.
Releasing those supplies could cool off overheated energy markets, but it also would put a tighter squeeze on the world’s oil supplies as the global economy recovers and consumption rises.
“They’ll remove the cushion of extra supplies,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.
“Until this situation gets resolved, prices are going to continue to grind higher.”
The Energy Information Administration estimates OPEC can crank up production by another 4.7 million barrels per day. An extended shut-down of Libya’s exports would slice that capacity by about 32 per cent to around 3.2 million barrels per day. Most of the world’s spare capacity lies in OPEC nations, primarily Saudi Arabia.
“The question then is what else can happen,” said Erik Kreil, who covers international energy markets for EIA.
“If it gets worse in North Africa or the Middle East, production could fall further and you’ll have less spare capacity.”
Global spare capacity fell below two million barrels per day in 2008 before oil prices spiked to an all-time record of US$147 per barrel.
In other Nymex trading on Monday for April contracts, heating oil was unchanged at US$3.0896 per gallon, while gasolene futures lost a penny at US$3.0332 per gallon. Natural gas rose six cents to US$3.870 per 1,000 cubic feet.
– AP
