Oil rises in Asian trade, NY crude gushes over $106

I / Afp/pti March 07, 2011, 13:41 IST

Oil rose higher in Asian trade today with the New York contract surging past $106 in the afternoon, a new two-year high as turmoil in the Middle East continued to unsettle investors, analysts said.

New York's main contract, light sweet crude for April delivery, rose $1.76 to $106.18, while Brent North Sea crude for April was up $1.16 at $117.13.

"Oil prices continue to be on the up trend primarily due to the deepening conflict in Libya, and concerns about the protests spreading to other parts of the Middle East's oil-producing region," said Victor Shum, a senior principal for international energy consultants Purvin and Gertz.

"Concerns over oil supply disruptions in Middle East and North Africa continue to drive oil prices," the Singapore-based energy expert said. Heavy fighting continued in Libya as forces loyal to leader Moamer Kadhafi battled rebels for control of the country's key cities and oil ports.

Libya is the fourth biggest oil exporter in Africa after Nigeria, Algeria and Angola, producing around 1.8 million barrels a day, with reserves of 42 billion barrels. The bulk of its oil production is normally exported to Europe, according to the International Energy Agency.

Meanwhile, the White House said yesterday it had not ruled out tapping the country's strategic oil reserves to counter the sharp rise in crude prices. "Well, we're looking at the options. The issue of the reserves is one we're considering," White House chief of staff William Daley told NBC.

"There's a bunch of factors that have to be looked at. And it is just not the price," but also uncertainty stemming from unrest in the oil-rich Middle East and North Africa, he stressed.  

Daley said President Barack Obama was "extremely concerned" about the rising price of oil and its impact on the struggling US economy.