Continued unrest in the Middle East and North Africa has pushed up global crude oil prices, which have now risen to more than $116 a barrel, while rising US inventories widened the spread between European and US prices.
The 12-crude basket of exports from the member states of the international oil producers group Opec pushed past $100 a barrel to $105.88 a barrel on 23 February, the last date for which prices were available.
In Europe, Brent crude prices hit $116.33 a barrel at the end of trading on 23 February, up $13.85 from 17 February, when it was valued at $102.48 a barrel.
The European crude market has been supported by ongoing threats to supply from the Middle East due to the current political upheaval in Libya, Egypt and Bahrain.
Barclays Capital estimates that about 1 million barrels a day (b/d) of Libyan production is likely to be shut in.
Italy is the biggest buyer of Libyan crude, with imports averaging 376,000 b/d in 2010. The country’s gas sector will feel the effects more acutely than oil supplies, however.
“The latest unrest in Libya shines the spotlight on risks to natural gas supply in the region,” say analysts at Barclays Capital.
Libya exported more than 9 billion cubic metres of gas to Italy in 2010, accounting for 11 per cent of the countries gas demand, via the Green Stream pipeline. Italy’s Eni announced yesterday that it is currently in the process of emptying this pipeline due to supply disruptions in Libya and the physical threat to staff (MEED 23:2:11).
The US’ benchmark March West Texas Intermediate (WTI) contract was trading at $100.63 a barrel on 23 February, up $15.72 a barrel from seven days earlier when it was valued at $84.91 a barrel.
The spread between Brent and WTI prices has now increased to $13.85 a barrel.
Crude stockpiles in the US have risen to the highest levels since at least 2004, as sluggish demand for gasoline kept storage tanks full. The supply of gasoline was reduced by 0.3 per cent in the week ending 4 February, according to the US Energy Department, extending the drop in demand to six consecutive weeks.