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Oil up near $103 amid Libya, Ukraine conflicts

May 19, 2014

The price of oil approached $103 a barrel Monday as violence in Libya threatened to once again delay a potential increase in the country’s exports of crude.

By early afternoon in Europe, benchmark U.S. crude for June delivery was up 78 cents to $102.80 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, the Nymex contract added 52 cents to close at $102.02, gaining about 2 percent for the week.

Brent crude for July delivery, a benchmark for international oil, was up 35 cents to $110.10 on the ICE Futures exchange in London.

In Libya, which has Africa’s largest proven reserves of crude, political instability deepened Sunday after militiamen loyal to a renegade general stormed the parliament building in the capital city of Tripoli. On Monday, the country’s army chief ordered the deployment of Islamist-led militias in Tripoli, which could lead to a showdown between the two sides.

Libya, earlier a key crude supplier to European refineries, has been struggling to stabilize its oil output and exports since the 2011 ouster of dictator Moammar Gadhafi. Production is down to around 200,000 barrels a day from some 1.4 million barrels a day a year ago.

“In light of the latest reports, any significant and lasting rise in the production level appears illusory,” said analysts at Commerzbank in Frankfurt in a note to clients.

The developments in Libya also pointed to tighter supplies in the second half of the year, as predicted last week by the International Energy Agency, unless other OPEC countries like Saudi Arabia and Iraq increase their output.

Oil prices were also supported by a surge in U.S. housing construction and continued fighting between government troops and pro-Russian rebels in eastern Ukraine even as Russian President Vladimir Putin ordered troops near Ukraine to return to their home bases.

In other energy futures trading in New York:

— Wholesale gasoline rose 1.69 cents to $2.9724 a gallon.

— Natural gas added 4.7 cents to $4.46 per 1,000 cubic feet.

— Heating oil gained 1.56 cents to $2.9642 a gallon.

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