Crude Oil Prices Hit New 2.5-Year Highs

NEW YORK – World oil prices jumped Friday to their highest levels in more than two years as the market was driven by simmering political tensions in the Arab world and concern over elections in Nigeria.

New York’s main contract soared to $112.91 — a level last seen in September 2008, before pulling back to $112.79, up $2.49 from Thursday.

Brent North Sea crude for delivery in May ended the day at $126.65, up $3.98 from Thursday’s closing level.

Prices rose sharply this week on the back of violent unrest in Libya, popular unrest in the wider Middle East, and as the dollar has weakened against the euro.

“All eyes are focused on Libya and the news for those looking for a quick resumption of supplies and lower oil prices is not good,” said PVM Oil Associates analyst David Hufton.
“Libyan leader Moamer Kadhafi’s troops have destroyed the infrastructure of the only oil fields under the control of his opponents, cutting off their only source of finance.”
Events elsewhere in Africa took a toll.

“Current levels for crude are primarily supported by the Middle East tensions and also the Nigeria elections,” said Chen Xin Yi, a commodities analyst with Barclays Capital.

“The postponement of last week’s parliamentary polls (in Nigeria) due to logistical problems does not bode well for presidential elections,” Chen added.

Nigeria, a major oil exporter, on Thursday announced a third delay in legislative polls in some parts of the country after failure to overcome
logistical problems.

Further support for oil prices came from the weak dollar, which makes dollar-priced commodities cheaper for buyers using stronger currencies like the euro. That tends to increase demand and prices for crude.

The euro jumped to $1.4422, its highest level since January 2010, and touched a May 2010 peak against the yen as traders bet that the European Central Bank could deliver more interest rate hikes in the coming months.

The ECB on Thursday hiked its key lending rate by a quarter-point to 1.25% to combat inflation, the first increase in nearly three years.

Source – AFP /ls

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