Oil futures
were stable at 2 1/2-year highs Monday, as recent battles in Libya point to an extended conflict while U.S. economic data suggests rising
oil demand.
Light, sweet crude for May delivery was down 5 cents at $107.89 a barrel on the
New York Mercantile Exchange. Prices earlier surpassed $108 a barrel, trading
at their highest since September 2008. Brent crude on the ICE futures exchange
was up 83 cents, or 0.7%, to $119.53 a barrel.
Prices were steady as Libyan rebels reclaimed the key oil town of Brega on Libya's coast over the weekend, according to the Associated Press. The city
has been the site of fierce fighting between the rebels and forces loyal to
Col. Moammar Gadhafi, and the back-and-forth battles are sending a signal that Libya's 1.3 million barrels a day of oil
exports are unlikely to return to the market soon.
"In the short term, oil prices should remain supported on the back of
supply risks," Commerzbank analysts said in a research report. "As
long as the fighting for major Libyan oil towns Ras Lanuf and Brega continues,
a resumption of oil shipments is unthinkable."
However, Libyan army defectors are assuming increasing control of rebel ranks,
instilling discipline in the rag-tag rebellion. A Turkish official told the
Wall Street Journal that the official Libyan government and rebel leaders will
visit the Turkish city of Ankara
to offer ideas of how to reach a ceasefire. Any signs of a truce would likely
take some steam out of oil prices.
Fears of further unrest in the Middle East,
however, are keeping traders on edge. In Yemen, police fired live rounds and
tear gas on antigovernment protesters in the cities of Taiz and Hudaida over
the weekend. Although Yemen
is not a major oil producer, traders remain edgy over the prospect of tensions
stoking supply disruptions elsewhere in the region.
"With Yemen in play,
concerns about Yemen falling
apart, it's just another country we have to worry about," said Phil Flynn,
oil analyst with PFG Best in Chicago.
In Nigeria,
violence has flared ahead of the latest cycle of elections. The country is the
largest producer in the region and has seen attacks on oil installations in the
Niger Delta during previous elections.
Prices remained supported over the weekend by positive economic data out of the
U.S.
The Labor Department said Friday that U.S. employers added 216,000 jobs
last month, sending a signal that the economy of the world's largest oil
consumer remains on a slow-but-steady path toward recovery.
However, some have raised questions over just how high prices can go before
consumers balk. Commerzbank said high oil prices are keeping a lid on demand
and oil prices would fall "in the course of the year once the supply risks
ease."
Front-month May reformulated gasoline blendstock, or RBOB, recently traded up
0.32 cent, or 0.1%, to $3.1545 a gallon. May heating oil gained 1.47
cents, or 0.5%, to $3.1492 a gallon.