Oil near $105 as traders eye Middle East upheaval

[March 23, 2011]  SINGAPORE (AP) -- Oil prices hung near $105 a barrel Wednesday in Asia as violent uprisings in the Middle East kept traders nervous about possible crude supply disruptions.

Benchmark crude for May delivery was up 4 cents to $105.01 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.88 to settle at $104.97 on Tuesday.

The April contract, which expired Tuesday, climbed $1.67 to end at $104.

In London, Brent crude was up 18 cents at $115.88 a barrel on the ICE futures exchange.

Oil has jumped 24 percent since Feb. 14 as violent protests rock the Middle East and North Africa.

In Yemen, an important transfer point for global oil supplies, embattled President Ali Abdullah Saleh warned Tuesday that the country could slide into a civil war as the opposition rejected his offer to step down by the end of the year. Also on Tuesday, violent protests spread in southern Syria.

In Libya, fighting between rebels and government forces has halted most of the country's 1.6 million barrels a day of crude production. Investors expect that allied coalition military intervention on the side of rebels will likely prolong the shutdown of oil output from the OPEC nation.

U.S. Navy Adm. Samuel J. Locklear said Tuesday that intelligence confirmed Libyan leader Moammar Gadhafi's forces were attacking civilians in Misrata, Libya's third-largest city, and said the international coalition was "considering all options" there.

The market is factoring in a "virtual loss of the Libya's exports for an extended time period of at least six months," Ritterbusch and Associates said in a report. The widespread unrest in the region will keep oil prices elevated throughout the spring and into the summer, it said.

Oil demand in China, the world's second biggest crude consumer behind the U.S., rose 10.1 percent in February from a year earlier, to the second strongest level on record, Platts reported Tuesday.

"Demand growth has shown little signs of slowing down," Barclays Capital said. "Indeed, led by a renewed surge in Chinese demand in particular, demand has continued to surprise to the upside."

The American Petroleum Institute said late Tuesday that U.S. crude inventories rose 970,000 barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast an increase of 2.0 million barrels. Inventories of gasoline plunged 7.9 million barrels and distillates fell 612,000 million barrels, the API said.

The Energy Department's Energy Information Administration reports its weekly supply data later Wednesday.

In other Nymex trading for April contracts, heating oil was steady at $3.08 a gallon and gasoline gained 1.5 cents to $3.02 a gallon. Natural gas added 3.2 cents to $4.29 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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