Oil tops $105 per barrel
Oil rising again; gasoline prices flat, but experts say they should keep climbing this spring,
Tuesday March 22, 2011
NEW YORK (AP) -- Oil prices pushed above $105 per barrel Tuesday, as traders focused on a series of international crises that could tighten global supplies at a time when consumption is expected to increase.
Benchmark West Texas Intermediate for May delivery rose $1.88 to settle at $104.97 per barrel on the New York Mercantile Exchange. At one point it was as high as $105.18. In London, Brent crude gained 73 cents to settle at $115.64 per barrel.
Energy economists continued to gauge how recent unrest in Libya, Bahrain, Yemen and Syria will affect exports from a region that produces 27 percent of the world's oil. Libya, which sits on the largest oil reserves in Africa, has almost totally stopped petroleum shipments as rebels battle pro-Gadhafi troops. The addition of international forces, including the U.S., could mean that the country will be embroiled in a protracted conflict that will keep oil fields offline much longer than previously expected, energy experts said.
In Yemen, embattled President Ali Abdullah Saleh pledged to step down more than a year early, but his refusal to leave immediately infuriated tens of thousands of demonstrators. Yemen is an important transfer point for global oil supplies.
"Tensions are still pretty high in that entire region, so prices are going to stay above $100 per barrel for a while," PFG Best analyst Phil Flynn said.
Iraq's new oil minister said Tuesday that he expects oil to reach $120 a barrel. Iraq produces about 2.4 million barrels of oil per day.
Retail gasoline prices in the U.S. held steady on Tuesday at a national average of $3.547 per gallon, according to AAA, Wright Express and Oil Price Information Service. They're still the highest ever for this time of year. A gallon of regular has jumped 37.9 cents in the last month and is 72.7 cents more expensive than a year ago.
OPIS gasoline analyst Fred Rozell said gasoline prices may continue to rise this spring to a national average of $3.75 per gallon. "With everything happening around the world, we're not going to see prices fly backward anytime soon," Rozell said.
Demand for oil and gas should rise as the U.S. and global economies continue to recover. China shows little sign of reducing its thirst for petroleum. Platts reports that China's oil demand in February rose 10.1 percent from a year ago, to the second strongest level on record. It hit an all-time high in December. China is the world's second biggest oil consumer behind the U.S.
Meanwhile, Japan continues to stabilize the Fukushima Dai-ichi nuclear complex that was damaged and leaking radiation following this month's earthquake and tsunami. The government will release more than 56 million barrels of oil from the country's reserves -- enough to cover 22 days of demand, analyst Addison Armstrong said. Japan previously released three days' supply of oil from its reserves.
Bank of America analyst Sabine Schels said Japan will rely on other power generators that run on liquefied natural gas and oil to make up for the loss of its nuclear facilities.
Schels estimated that Japan will increase imports of liquefied natural gas by 706 million to 848 million cubic feet per day to partially replace power lost from damaged nuclear reactors. Royal Dutch Shell is among oil companies shipping more crude and LNG to Japan to help offset power shortages.
Japan's increased imports are expected to push world natural gas prices higher, though large global supplies should prevent them from spiking above $13 per 1,000 cubic feet as they did in 2008. Schels expects natural gas prices to average around $4.48 per 1,000 cubic feet this year. Natural gas for April delivery gained 9.3 cents to settle at $4.254 per 1,000 cubic feet.
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