New York oil price hits $101; gold strikes record peak

2nd March 2011, Comments 0 comments

New York oil prices briefly hit $101 on Wednesday, as Libyan leader Moamer Kadhafi's regime loyalists clashed with opposition rebels, while safe-haven gold struck another record high point.

New York's light sweet crude for April, known as West Texas Intermediate (WTI), briefly rallied as high as $101.47 per barrel. It later stood at $100.34, up 71 cents from Tuesday's closing level.

London Brent North Sea crude for delivery in April gained ten cents to $115.52 per barrel. Brent oil, which soared last week close to $120 as tensions flared in Libya, trades at a large premium to WTI because of high US reserves.

Meanwhile on Wednesday, Kadhafi's forces clashed with opposition rebels and attempted to win back control of the eastern oil town of Brega, while he warned that the nation was heading for a brutal bloodbath.

"The continued unrest in Libya and other Arab countries is allowing oil prices to rise further," said Commerzbank analyst Carsten Fritsch.

The US government's Department of Energy is also set to publish its weekly oil inventories report.

"The impact on the market should be limited given the events in Libya. High inventories in the US suggest a persistently high price gap between Brent and WTI," added Fritsch.

Investors remain very worried about unrest sweeping across oil producing countries and disrupting supplies from the Middle East and North Africa.

"Clearly everyone is concerned" about turmoil in the Middle East and North Africa, said John Vautrain, vice president for Purvin and Gertz international energy consultants in Singapore.

Gold prices surged to a new record high on Wednesday, driven by safe-haven buying amid violent unrest in Libya, and as the dollar fell against major rival currencies, traders said.

Record-breaking gold leapt as high as $1,438.30 per ounce on the London Bullion Market at about 1500 GMT.

And sister metal silver scored $34.90 an ounce, which marked the highest level in 30 years.

"Gold hit a new record high again today as risk aversion took hold in the market ... as Libya looked like descending in to civil war," said analyst Ian O'Sullivan at financial betting group Spread Co.

"The weaker dollar is helping to lift the price of gold, as well as the usual high demand for safe haven buying with the current Middle East situation and inflation concerns.

"Silver also hit a new 30 year high as the demand for silver also continues unabated."

A struggling US unit can make dollar-priced commodities like gold and silver cheaper for buyers holding rival currencies.

The precious metals draw strength in times of geopolitical turmoil because they are regarded by many investors as a safe haven.

Oil prices have been soaring after popular uprisings toppled the leader of Tunisia in January, followed by long-time strongman Hosni Mubarak of Egypt in February.

Libyan leader Moamer Kadhafi is now fighting a rebellion against his four-decade-old rule, while protests are rocking other parts of the oil-rich region, including Yemen and Oman.

Western powers on Tuesday weighed whether military action was a viable option against Kadhafi.

Clashes also took place Tuesday between protesters and security forces in Iran, the world's fourth-largest oil producer.


© 2011 AFP

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