Oil price nears $120

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Oil prices closed in on $120 Monday, hitting two-and-a-half-year highs on expectations of higher demand as strong US jobs data offset concerns over Middle East supplies.

Brent North Sea crude reached an intra-day high of $119.75 a barrel. It later pulled back, with the May contract at $119.31, up 61 cents from Friday's close.

New York's main contract, light sweet crude for delivery in May, reached $108.78 a barrel -- the highest level since September 2008. It went on to stand at $108.40 at about 1140 GMT, up 46 cents from Friday.

More than 200,000 jobs were created and unemployment fell to 8.8 percent last month in the United States, the world's biggest oil consumer, official data showed Friday.

"I would say the fall in the unemployment rate wasn't expected by the market so it probably gave a little extra upward impetus to oil prices," National Australia Bank analyst Ben Westmore told AFP.

He said traders had already priced in supply disruptions due to the ongoing Libyan conflict but warned of the effects of any spillover into the oil-rich Middle East.

"The important thing going forward is any news on the spread of the conflicts to other countries. That would be the thing that is not yet reflected in prices and would cause prices to push higher," he said.

OPEC member Kuwait said on Monday that oil prices were too high because of unrest in the Middle East and Japan's earthquake.

"Although we are enjoying high prices, we would like to see lower prices ... We would like to see a normal oil price," the CEO of national conglomerate Kuwait Petroleum Corp (KPC), Faruq al-Zanki, told reporters.

He said a "normal oil price would be between $90 and $100" a barrel.

In Libya on Monday, rebel forces made a new attempt to recapture the oil town of Brega, advancing under artillery fire, as hundreds wounded in Libya's besieged third city Misrata were evacuated by ship.

"Geopolitical concerns and fears for shrinking global spare production capacity amid ongoing demand recovery saw Brent gaining almost 25 percent in the first quarter while NYMEX's crude added almost 18 percent," VTB Capital analyst Andrey Kryuchenkov noted.

© 2011 AFP

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