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SINGAPORE, Feb 24 (Reuters) - Oil prices hit a fresh 2-1/2
year peak on Thursday on concern the bloody unrest in
OPEC-member Libya could spread to other major producers in the
region including Saudi Arabia.
Disruption stemming from the revolt in Libya has cut more
than a quarter of output from the world's No. 12 exporter. At
least 400,000 barrels per day of the country's 1.6 million
output is shut, according to Reuters calculations.
Brent crude touched $113 a barrel for the first time
since Sept. 1, 2008. The contract later trimmed gains and was up
$1.53 at $112.78 a barrel at 0310 GMT.
U.S. crude for April delivery rose $1.01 to $99.11
per barrel, after touching $100 for the first time since October
2008 on Wednesday.
The cuts from Libya represent the first disruption to supply
as a wave of protests swept through the oil producing regions of
North Africa and the Middle East.
The concern for oil markets is how the protests affect Saudi
Arabia, which not only pumps around 10 percent of the world's
oil but is also the only holder of significant spare crude
production capacity that could be used to plug supply outages
elsewhere.
Without Saudi Arabia's 4 million bpd of spare capacity,
there is little margin in the global oil system to deal with
supply shortages.
To date, the kingdom has escaped the popular protests
against poverty, corruption and oppression that have raged
across the Arab world, toppling the long-time leaders of Egypt
and Tunisia and spreading as far as Saudi neighbour Bahrain.
"You can't ignore it, if you have trouble in Bahrain, there
is a fear that this could spread into Saudi Arabia," said Tony
Nunan, a risk manager with Tokyo-based Mitsubishi Corp.
"No one expected Egypt's (Hosni) Mubarak to go, now anything
is possible and that is why everyone is watching this closely."
Saudi King Abdullah returned home on Wednesday from a
three-month medical absence and unveiled benefits for Saudis
worth some $37 billion in an apparent bid to insulate the
world's top oil exporter from the protests across the Arab
world.
Hundreds of people on Wednesday backed a Facebook page
campaigning for a "day of rage" across the kingdom on March 11
to demand an elected ruler, greater freedom for women and the
release of political prisoners.
LIBYA
Eastern areas holding much of Libya's oil have slipped from
the control of Muammar Gaddafi, who has unleashed a bloody
crackdown on protesters to keep his 41-year grip on power. The
death toll may already be as high as 1,000 people, Italy's
Foreign Minister said.
President Barack Obama broke his silence on Libya late on
Wednesday, calling for international unity to end the violence
but did not call for Gaddafi to go. .
Staff from international oil firms are among the many
leaving the country as governments around the world scramble to
send planes and ships to evacuate their citizens from the North
African producer.
Top Chinese oil and gas company China National Petroleum
Corp (CNPC) said on Thursday it had evacuated some of its
employees.
The unrest has added as much as $20 to oil as investors
price in the potential for further disruptions, but for now
supply was plentiful, Nunan said.
"There is about a $10-$20 risk premium on oil prices at the
moment, but fundamentals show that the market is still well
supplied for now even with disruptions to production in Libya,"
he said.
Weekly U.S. oil inventory data from industry group API
showed on Wednesday that petroleum stocks had risen 163,000
barrels last week, after analysts polled by Reuters had forecast
a bigger rise of 1.2 million barrels.
Distillate inventories fell a less-than-expected 534,000
barrels and gasoline supplies fell by 1.6 million barrels, API
data showed, bucking analyst expectations for a rise.
U.S. Energy Information Administration's weekly inventory
figures are due to be released later today.
Brent traded at a $13.65 spread to U.S WTI at 0311 GMT,
wider than the $13.28 close on Wednesday.
(Reporting by Luke Pachymuthu; Editing by Simon Webb)
