By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) — Oil futures edged higher on Thursday as fighting raged on in Libya, reigniting worries that oil-supply disruption will spread.
Light, sweet crude-oil futures for April delivery (CLJ11 104.71, +0.33, +0.32%) rose 28 cents to $104.65 a barrel in electronic trading on the New York Mercantile Exchange.
The gains followed two straight sessions of losses in regular trading in New York, when supply worries eased up a fraction amid reports that OPEC — the Organization of Petroleum Exporting Countries — will raise production in order to counter outage from Libya.
Much of Libya’s oil production is already off-line amid fighting between government and non-government forces in the country.
Government-supporting forces fired a barrage of rockets at the rebels in order to try and recapture some key oil assets, the Wall Street Journal reported late Wednesday.
Foreign governments have expressed concern about the situation and are looking at options for military intervention, according to reports.
Delegates from Libya’s government headed to Europe in order to talk to European Union and North Atlantic Treaty Organization ministers slated to hold meetings on Thursday, according to The Wall Street Journal. Both have rebuffed Libya’s overtures, the report added.
The possibility that demonstrations will spread further through the Middle East — particularly to large-scale oil producer Saudi Arabia — has kept the market on edge for some weeks.
“The rally of crude-oil prices is not being driven by an actual tightening of supply, but rather the fear that the unrest will spread to other oil producing countries,” said Commerzbank strategists.
“This risk is still a real one, which is why the price is well supported,” they said. On Monday, oil futures finished at a 29-month high in New York.
Still, data out late Wednesday from the U.S. showed a larger-than-expected rise in crude supplies.
The U.S. Energy Information Administration reported a rise of 2.5 million barrels for the week to March 4, exceeding by a wide margin the 600,000-barrel hike expected by analysts surveyed by Dow Jones Newswires.
