Libya pushes up Brent

Zawiya oil-refinery Libya19 May 2014, News Wires – Brent crude rose to $110 per barrel on Monday, thanks to renewed concerns over Libya’s oil output following some of the worst violence in Tripoli since the 2011 war against Muanmar Gaddafi.

Heavily armed gunmen stormed Libya’s parliament on Sunday and demanded its suspension, claiming loyalty to a renegade army general and deepening the chaos in the country.

“This is the worst outbreak of militia-related violence for a while and a reversal of the relatively positive sentiment that we had from Libya earlier in the month,” Societe Generale head of commodities research Mark Keenan told Reuters.

“It’s very likely that Libya is going to retain a strong geopolitical risk premium in oil markets going forward,” Keenan reportedly said.

Brent July crude gained $0.23 to $109.98 per barrel by Monday morning, after earlier touching an intraday high of $110.03.

US crude rose $0.17 per barrel to $102.19, after settling $0.52-per-barrel higher on Friday.

In April, an end to a month-long blockade of key oil ports in eastern Libya, raised the prospect of more Libyan crude exports and weighed on global oil prices.

But last week, recently-opened oil fields were closed again and clashes erupted in the east, with 43 people killed and more than 100 wounded in Benghazi.

The country’s output fell to about 200,000 barrels per day from 300,000 bpd earlier last week, and it remains far below the 1.4 million bpd produced last year.

The conflict in Ukraine provided further support for the oil price as US President Barack Obama spoke with French President Francois Hollande about the situation on Friday.

The two leaders agreed that Russia faced “significant” further costs if it continued provocative and destabilising behaviour.

Meanwhile, Russia is ready to discuss a gas price discount for Ukraine if Kiev pays off the more than $2.2 billion it owed as of 1 April, Energy Minister Alexander Novak said.

Russia has warned that it will not supply Ukraine with gas in June unless Kiev pays in advance by 2 June, raising fears that deliveries to Europe could be affected.

A shortage of natural gas in Europe could prop up demand for substitute fuels such as oil.

Oil prices also found support from data showing US housing starts jumped in April and building permits hit their highest level in nearly six years, indications that the world’s top economy may be gaining traction.

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