LONDON, March 23: World oil prices advanced on Wednesday owing to escalating unrest in Libya and the Middle East, traders said.
Brent North Sea crude for delivery in May climbed 49 cents to $116.19 a barrel in London trade.
New York`s main contract, light sweet crude for May, gained 54 cents to $105.51 per barrel.
“The issues of Libya and Yemen have been driving prices of crude oil up, although Yemen is a small exporter and Libya has been more significant,” said John Vautrain of Purvin and Gertz energy consultancy.
US crude futures extended gains following the release of the US government weekly oil data at 14:30 GMT, pulling up North Sea Brent crude.
US crude rose 67 cents to $105.65 a barrel by 15:50 GMT.
US government data showed a 5.32 million barrel drop in gasoline inventories in the week to March 18, surpassing an analyst forecast of a 1.8 million barrel drop.
For so far in March, the fall in gasoline has already been the biggest since 1990, when the US Energy Information Administration started the weekly report.Gasoline demand over the past four weeks was 1.2 per cent higher than a year earlier.
But some analysts have cautioned that the fall came against the backdrop of a build up in inventories to multi-year highs earlier this year and crude and distillates stocks rose.
“Despite the price point, gasoline demand is relatively
strong at just over nine million barrels (per day),” John Kilduff, partner with Gain Capital in New York, said.
“The drawdown, by contrast, have been substantial, which is due entirely to the persistently low refinery utilisation rate.”
Earlier in the day, prices seesawed due to civil unrest across North Africa and the Middle East and resulted in the shutting in of the bulk of Libya`s oil output.
Brent prices dipped as western warplanes silenced Muammar Qadhafi`s artillery and tanks besieging rebel-held Misrata in western Libya on Wednesday.
Yemen is a very hot topic now. It is not that important to the oil market but unrest in the region gives enough psychological support to prices,” Andy Sommer, energy market analyst with EGL, said.
Its neighbour Saudi Arabia is the world`s top oil exporter and the only Opec member nation with enough spare capacity to compensate for supply disruptions elsewhere.
In West African oil producer Nigeria, some violence has been reported ahead of presidential election in April.
Global markets were also watching a key vote on austerity measures in Portugal that could see the country`s government brought down. The euro slipped ahead of the vote.
Also of concern is the impact of Japan`s earthquake and tsunami.
The cost of the damage could top $300 billion, making them out the world`s costliest natural disaster.
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