By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) -- Oil futures eased back a touch on Friday but remained within striking distance of $106 a barrel as political tensions continued to flare in the Middle East.
Light sweet crude futures for May delivery (CLK11 105.40, -0.20, -0.19%) fell 15 cents to $105.47 a barrel in electronic trading on the New York Mercantile Exchange. The contract closed down 15 cents at $105.60 in regular trading in New York on Thursday.
Edward Meir, senior commodity analyst at MF Global, attributed Thursday’s move for Nymex oil to profit taking after two sessions of gains.
Recently “[investors have been] bidding prices higher mainly on the back of geopolitical headlines,” he said.
One of the latest developments in the Middle East crisis has seen members of the North Atlantic Treaty Organization, or NATO, reportedly reach an agreement to take over enforcement of the United Nations-sanctioned no-fly zone over Libya.
NATO will assume enforcement of the no-fly zone from a coalition led by Britain, France and the United States within days, according to reports which cited NATO Secretary-General Anders Fogh Rasmussen.
Meir at MF Global noted that expectations that Japanese oil demand will bounce back after a recent earthquake and tsunami devastated the country are also providing a bit of support for oil prices.
Still, he cautioned that Japanese oil imports are likely running at much less than their pre-quake levels of 4.2 million barrels a day and data suggest an extra 0.7 million to 1.2 million tons of extra oil is on the market right now.
“At this point in time, investors are not bothering with running the numbers,” he said. However, if the market starts to discount a longer-than-expected timeframe to get power facilities back on track that “should temper expectations that Japanese commodity demand will undergo a vigorous snap-back,” he said.
