Oil close to $116 as tensions in Libya intensify (Reuters) (04-03-2011)

SINGAPORE – Oil rose close to $116 on Friday as tensions in Libya intensify due to new air strikes raising fears that the crisis could spread to other oil producers in the Middle East.

A Libyan warplane bombed just beyond the walls of a military base held by rebels in the eastern town of Ajdabiyah on Friday but did not hit it, just as rebels said they were preparing for counterattacks by forces loyal to leader Muammar Gaddafi as both sides struggled for control of a strategic coastal road and oil industry facilities.

Brent crude futures for April delivery rose $1.13 to $115.92 a barrel by 0746 GMT.

U.S. crude futures for April rose 89 cents to $102.80 a barrel. Both contracts are on track to post a second straight weekly rise.

Libya’s oil output has dropped to 700,000-750,000 barrels per day from normal levels of 1.6 million bpd as most foreign oil workers had taken flight.

Open interest in U.S. crude futures has been on the rise in recent sessions, nearing record highs as bullish investors position themselves for further supply shocks, increasing that way the pressure to liquidate positions at some stage although traders are about to buy back on dips as the turmoil in the Middle East and Africa could last for months.

If that happens, prices are about to stay above $100 and probably Brent will head to $150 a barrel within a year.

U.S. nonfarm payrolls data due later on Friday are expected to have risen in February after being held down by extreme winter weather in January.

Source: Reuters