MARKET WATCH: Oil prices rise on concerns of Libya, OPEC exports

Paula Dittrick
OGJ Senior Staff Writer

HOUSTON, Apr.1 -- Crude prices rose on both New York and London markets on Mar. 31, which analysts attributed to concerns that escalating fighting between rebels and Moammar Gadhafi’s troops in Libya could disrupt oil exports from the Organization of Petroleum Exporting Countries.

Opposition leaders in Libya on Apr. 1 said rebels would agree to a ceasefire if Gadhafi pulls his military forces out of cities and allows peaceful protests against his regime. Mustafa Abdul-Jalil, head of the opposition's interim governing council in Benghazi, talked to reporters during a joint press conference with United Nations envoy Abdelilah Al-Khatib, who visited the rebels.

Abdul-Jalil said the rebels' condition for a ceasefire is that the Gadhafi forces “withdraw from inside and outside Libyan cities to give freedom to the Libyan people to choose, and the world will see that they will choose freedom.”

The UN resolution that authorized international airstrikes against Libya called for Gadhafi and the rebels to end hostilities. Gadhafi announced a ceasefire, yet his forces continue to attack rebels in the east on Apr. 1. Analysts said they see no quick resolution.

In an Apr. 1 research note, Barclays Capital analysts said, “OPEC production for March shows sharply lower Libyan output, falling Nigerian volumes and higher Saudi production, highlighting the tight market conditions.”

“We see a floor for prices at around $105/bbl given consumer hedging interest and potential supply responses from key producers at $120/bbl, but ultimately fundamental pressures are building for a breakout to the upside from the current range,” said Barclays oil analyst Amrita Sen.

Civil unrest in the Middle East continues with events escalating in Yemen where tribe members opposed to Yemen's president attacked electricity towers, triggering power outages in parts of Sanaa.

“Already growing unrest and recent attacks on oil pipelines have reduced Yemeni oil production (260,000 b/d) by some 70,000 b/d, and foreign companies have evacuated their staff for safety purposes,” Barclays said. “Moreover, as we have highlighted, the presence of al-Qaeda in the country can also provide some…risks to Saudi oil infrastructure.”

Energy prices
The May contract for benchmark US light, sweet crudes escalated by $2.45 to $106.72/bbl Mar. 31 on the New York Mercantile Exchange. The June contract was up $2.40 to $107.24/bbl. On the US spot market, WTI at Cushing climbed $2.45 to $106.72/bbl.

Heating oil for April delivery rose 5¢ to $3.0898/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month continued climbing, up 4.36¢ to $3.1076/gal.

The new front-month May natural gas contract gained 3.4¢ to $4.389/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., also rose, up 4.5¢ to $4.295/MMbtu.

In London, the May IPE contract for North Sea Brent crude climbed $2.23 to $117.36/bbl. Gas oil for April gained $15 to $993/tonne.

Contact Paula Dittrick at [email protected].