Oil prices hold close to 2008 highs

7th April 2011, Comments 0 comments

Oil prices held close to recent 2008 highs on Thursday as traders shrugged off news of another earthquake in disaster-hit Japan.

In late afternoon deals, Brent North Sea crude for delivery in May slid 20 cents to $122.10 a barrel after soaring the previous day to $123.37, the highest level since early August 2008.

New York's main contract, light sweet crude for delivery in May, added 42 cents to $109.23. On Wednesday, it had hit $109.56, a level last seen in September 2008.

"Crude oil prices consolidated and trading volumes are fairly light, as investors ... remain cautious," said Sucden analyst Myrto Sokou.

A powerful 7.1-magnitude earthquake hit northeastern Japan late on Thursday, prompting Japanese authorities to issue a localised tsunami alert that was lifted shortly afterwards.

The news sent a wobble through financial markets, weeks after Japan's devastating March 11 earthquake and tsunami that sparked a nuclear disaster.

Meanwhile, traders digested news that the European Central Bank hiked interest rates for the first time in nearly three years to tame rising prices, just as the eurozone debt crisis claimed Portugal as its latest victim.

The ECB lifted its benchmark refinancing or "refi" rate to 1.25 percent from a record low of 1.0 percent, where it had stood since May 2009.

Oil hit two-and-a-half-year highs on Wednesday amid concerns about the war in Libya and as the dollar weakened against the euro.

A falling dollar encourages investors to buy dollar-priced commodities in a bid to protect their investment, so tending to push oil prices higher.

Victor Shum, senior principal for Purvin and Gertz energy consultants in Singapore, said disruption to Libyan oil supplies appeared to be easing after rebels fighting veteran leader Moamer Kadhafi started to ship crude.

A Greek-owned, Liberian-registered tanker carrying $100 million of crude left a terminal near Tobruk, 130 kilometres (80 miles) from the Egyptian border, on Wednesday.

The cargo was the first consignment of oil to leave Libya since UN-backed air strikes began on March 19 against Kadhafi's crackdown on the rebels.

Shum said dealers continued to monitor the volatile situation in the oil-rich Middle East and North Africa region, where popular uprisings have already toppled the leaders of Tunisia and Egypt.


© 2011 AFP

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