COMMODITIESMARCH 4, 2011, 11:57 A.M. ET
Crude at 2½-Year High on Reports of Fighting Near Libya Oil Facilities
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By DAN STRUMPF
NEW YORK—Crude-oil futures touched $104 a barrel on reports of fighting near Libya's oil facilities.
Light, sweet crude for April delivery gained $1.47, or 1.4%, to $103.38 barrel on the New York Mercantile Exchange, after rising as high as $104.09, the highest trade since Sept. 29, 2008. Brent crude on the ICE futures exchange recently added $1.02, or 0.9%, to $115.81 a barrel.
Oil prices continued to be lifted by violence in Libya, the Organization of Petroleum Exporting Countries member that has been consumed by armed revolt in recent weeks. A rebel witness told AFP that at least four people were killed in clashes near an oil compound at Raslanuf, while Reuters reported an oil facility at the eastern Libyan port of Zuetina is on fire.
Libya "went from an oil-producing country experiencing unrest to actual oil production being under martial attack," said John Kilduff of hedge fund Again Capital.
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Reports that a truce could be brokered by Venezuelan President Hugo Chávez caused oil prices to ease Thursday, but the prospect for such a truce appeared remote after opposition forces rejected mediation.
Nymex crude prices have gained more than 20% since the mass uprising began in Libya in mid-February. The International Energy Agency has said as much as one million barrels of oil per day have been removed from the market due to the crisis, and oil market participants are fearful that the violence could spread to other oil-producing nations.
"The stage now seems set for an extended period of instability, with the export flow of Libya's oil for all practical purposes either severely truncated or lost entirely to the market," Barclays Capital oil analysts said in a research report.
Oil prices got an additional lift Friday after the Labor Department's said unemployment in February fell below 9% for the first time in nearly two years. Nonfarm payrolls rose by 192,000 last month, with private-sector employers adding 222,000 jobs. In addition, the January jobs figure was revised upward to show an increase of 63,000 jobs, up from 36,000.
Signs of an improving economy in the U.S., the world's biggest crude consumer, often lift crude prices as traders become optimistic about increasing demand for oil and fuels.
"All the macroeconomic data this week in the United States was positive," said Dominick Chirichella, oil analyst with the Energy Management Institute. "I don't see anything that's going to push oil prices down significantly in the short term."
The differential between Nymex crude and Brent continued to narrow on Friday, with Brent trading at a premium of about $12 a barrel to Nymex's West Texas Intermediate blend. The narrower gap has surprised some traders, but market watchers attributed Friday's narrowing to a round of profit-taking after the gap, or spread, rose to a record high above $19 a barrel last month. Brent has been trading at a steep premium to WTI in recent months due to record supplies at the Nymex delivery point of Cushing, Okla.
"There's no way the spread is going to go back to normal anytime soon," Mr. Chirichella said. "The market's probing right now to find what's a short-term, steady state for the spread."