Oil still on highs keeping stocks under check (Reuters) (25-02-2011)

LONDON - Brent oil traded higher, despite assurances by top oil exporter Saudi Arabia that it would step in to fill any shortfall due to supply disruptions from oil-rich Libya. Analysts predicted that elevated oil prices could trigger more selling in stocks and other risky assets.

Brent crude oil futures rose $1.45 to $112.81 per barrel, while U.S. crude rose to $98 as Libya output cuts weighed. Key Libyan oil terminals are under rebel control while Muammar Gaddafi's forces have fought back against the rebellion.

Oil prices came off 2-1/2 year highs, but still remain up 12 percent in the past three sessions alone, raising concerns about a wider slowdown in global growth and lending support to safe-haven assets such as gold, U.S. Treasuries and, of late, the Swiss franc.

The dollar stayed near a record low against the franc on Friday as higher oil prices are seen to have a bigger impact on the U.S. economy given its reliance on consumer spending for growth.

Even if oil markets stabilize, broader sentiment could remain cautious as high fuel prices would add to inflationary pressures and crimp consumer demand. Growth in Asian economies will then be under threats.

Since the Libyan crisis erupted earlier this month, some of the worst performing markets within Asia are India, South Korea and Taiwan due to their higher dependency on oil imports.

Source: Reuters