By Phaedra Friend Troy
The price of crude oil rose again Tuesday on supply fears spurred by civil unrest and violence in the Middle East and North Africa.
While the price of oil settled at $99.64 on the New York Mercantile Exchange Tuesday, in intra-day trading, the price of crude oil rose to a high of $99.77 a barrel. In London, Brent crude prices jumped to more than $114 a barrel in trading Tuesday.
“The market is obviously watching the Middle East unravel – and continue to unravel,” said Phil Flynn, energy trader and analyst with PFG Best.
Egyptian protestors were able to enact change last month by taking to the streets, and similar civil unrest has ignited across the Middle East and North Africa.
Civil Unrest Sparks Oil Supply Fears
Protests in Libya have led to violence in the North African country, with hundreds feared dead. Various international operators have curtailed production and pulled expatriate employees from the country.
An OPEC member country and the third largest oil producer in Africa, Libya has been under the rule of Muammar Gaddafi for three decades. According to a report from CNN, nearly 150,000 people have fled from Libya since the violence began.
“We tried to bandage up all the fears and concerns in the marketplace, but today we had one story after another that affected the oil industry,” Flynn said.
Reports emerging from Saudi Arabia of civil uprisings, a jailed Shi’ite cleric and mobilized tanks have helped to spark fears of diminished oil supplies; and the price of oil has risen on that sentiment. Typically, oil-rich Saudi Arabia is viewed as a stabilizing force in the Middle East and among other OPEC nations.
Reports of civil unrest spreading into other oil-producing countries, including Iran, Kuwait and Algeria, have materialized, as well.
“The concern is that the situation in the Middle East is going to continue to spread,” Flynn said.
Natural Gas Falls Below $4
Natural gas, on the other hand fell below the $4 mark on Tuesday to trade near $3.87 on the Henry Hub.
Despite increased usage during the winter weather months, natural gas has been trading at historic lows for some time due to increased production from various shale plays across the US. Additionally, March typically heralds in warmer weather, which decreases the demand for heat.
“The natural gas market is reacting in part to this rising oil price,” Flynn explained. “If oil prices continue rising, inflation may set in and stall the economy.”
Oil prices spike to near $100 on the NYMEX, $114 in London
By Phaedra Friend Troy