Oil reaches $116 after bombs on Libyan oil pipeline (Reuters) (10-03-2011)

SINGAPORE – Oil rose at $116 on Thursday after forces loyal to Libyan leader Muammar Gaddafi bombed oil industry infrastructure, leading to a longer-term damage on the country's exporting capacity.

Gaddafi's forces struck an oil pipeline leading to Es Sider and dropped bombs on storage tanks in the Ras Lanuf oil terminal area in the eastern section of Libya that is rebel-controlled.

Brent crude for April gained 15 cents to $116.09 a barrel at 0755 GMT after soaring almost $3 on Wednesday, or 2.5 percent, from as low as $112.16. They reached a 2-1/2-year high of $119.79 on February 24.

U.S. crude gained 44 cents to $104.65, after touching a 2-1/2-year peak of almost $107 earlier this week.

According to the EIA, total U.S. crude inventories rose 2.5 million barrels last week, while the weekly inventory data also showed drawdown for gasoline and distillates was bigger than expected, reflecting improving demand.

Shokri Ghanem, the chairman of Libya's National Oil Corp, said that production has been cut to about half a million barrels per day from 1.6 million bpd by the war, as many foreign and local workers have left oil fields.

Libyan oil trade has been paralyzed as banks decline to clear payments in dollars due to U.S. sanctions, though Austrian energy group OMV said it had been buying small amounts of Libyan crude oil and would continue to do so.

Source: Reuters