Oil above $85 as rebels struggle to control Libya
Tuesday, August 23, 2011
SINGAPORE (AP) — Oil prices rose to above $85 a barrel Tuesday in Asia as a bid by Libyan rebels to take over Tripoli stalled and Moammar Gadhafi’s whereabouts remained unknown.
Benchmark oil for October delivery was up 60 cents to $85.02 at midday Singapore time in electronic trading on the New York Mercantile Exchange. Crude rose $1.86 to settle at $84.12 on Monday.
In London, Brent crude for October delivery was up 47 cents to $108.83 on the ICE Futures exchange.
Crude fell in early trading Monday amid reports rebels were about to capture Tripoli and had arrested two of Gadhafi’s sons. However, one of the sons, Seif al-Islam, later appeared free in front of a cheering crowd of Gadhafi supporters, putting into doubt who controlled the capital.
Analysts were also questioning how fast Libya’s oil production could recover should rebels take power. Fighting since February has cut the OPEC nation’s crude output to 60,000 barrels a day from 1.5 million, and the country’s oil infrastructure has been damaged.
Goldman Sachs said it was sticking by its forecast that Libya’s oil production will average 250,000 barrels a day next year.
“It will be challenging to bring the shut-in production back online,” Goldman Sachs said in a report. “We don’t change our production forecast until we have more clarity on the situation.”
Other analysts are more optimistic. Libyan crude output will likely return to pre-war levels in the first half of next year, said Richard Soultanian of NUS Consulting.
“With the new regime entirely dependent on oil revenues, the momentum to get facilities operational will be overwhelming,” energy consultant Cameron Hanover said in a report. “In order for this new democracy to attract enough support, it will need to get oil flowing right away.”
In other Nymex trading for October contracts, heating oil rose 1.0 cent at $2.93 per gallon and gasoline futures added 1.0 cent to $2.72 per gallon. Natural gas for September delivery gained 0.1 cent to $3.89 per 1,000 cubic feet.