Oil Rise Resumes

 Econintersect:  Yesterday’s headline was oil prices ease slightly by today (Friday, March 4), it has changed to a more familiar recent theme.  An Associated Press report at Yahoo News attributed the rise to the fierce fighting between rebels and supporters of Muammar Qaddafi in Libya.However, some analysts hold the opinion that the impact of the Libyan situation on prices may be contained.  From Yahoo News:

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.

The closing prices for March 4 listed by Bloomberg:

• WTI Cushing Spot          $104.42   -0.3%
• Dated Brent Crude         $115.72    -1.3%
• NYMEX Crude Futures $104.42  -0.4%

The spread between Brent Crude and WTI continued to shrink, ending at $11.30 by Friday’s close.  This is a dramatic drop from a spread of $16.60 on Tuesday.  GEI considers this a reflection of the increasing sentiment that the risk of oil disruption is becoming more global and less concentrated in Europe, the region closest to the unrest.

Sources:  Bloomberg, Yahoo News and GEI News