Oil prices jumped to fresh 30-month highs above $108 a barrel Monday as the conflict in Libya extended market concerns about supply risks and signs of a recovering U.S. jobs market bolstered optimism that global crude demand will strengthen.
By early afternoon in Europe, benchmark crude for April delivery was up 30 cents at $108.24 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, the contract reached $108.78, while on Friday it rose $1.22 to settle at $107.94.
In London, Brent crude for April delivery was up 60 cents to $119.30 a barrel on the ICE Futures exchange.
The U.S. said Friday its economy added 216,000 new jobs last month and the unemployment rate dropped to 8.8 percent, boosting trader confidence that more workers will help fuel consumer spending.
Investors are also closely watching Libya, where a standoff is developing as forces loyal to Moammar Gadhafi control most of the western half of the OPEC nation while rebels have seized most of the eastern coast.
On Monday, rebels pushed into the strategic oil town of Brega but came under fire from Gadhafi’s forces.
“As long as the fighting for major Libyan oil towns Ras Lanuf and Brega continues, a resumption of oil shipments is unthinkable,” said analysts at Commerzbank in Frankfurt.
Before the conflict, Libya was exporting 1.6 million barrels a day – about 2 percent of the world’s supply.
“OPEC has also shown that it is taking the Libyan outage seriously,” said a report from JBC Energy in Vienna. “Libyan production declined by just over 1 million barrels a day in March, but total OPEC production fell by only 500,000 barrels a day as other OPEC members – mainly Saudi Arabia, the United Arab Emirates and Kuwait – picked up the slack.”
Some analysts say oil prices – which have jumped about 29 percent since Feb. 15 – will likely begin to fall unless the U.S. announces a major new program to provide cheap money or violent protests spread in the Middle East and North Africa.
“For prices to continue their ascent, a new event or exacerbation of existing events will be necessary,” said Richard Soultanian of NUS Consulting. “Should this come to pass, we believe prices will spike.”
In other Nymex trading in April contracts, heating oil rose 1.16 cents to $3.1461 a gallon and gasoline added 0.8 cents to $3.1593 a gallon. Natural gas futures were down 4.4 cents at $4.318 per 1,000 cubic feet.
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Alex Kennedy in Singapore contributed to this report
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