Oil prices surge on Middle East unrest
NEW YORK (AP) — Oil prices surged Friday as thousands continued to riot against the government in Egypt, and unrest threatened to spread across the Middle East.
Benchmark oil rose US$3.70, or 4.3 per cent, to settle at US$89.34 a barrel on the New York Mercantile Exchange. Oil rose as high as US$89.73 a barrel at one point.
Prices shot up about US$2 a barrel in less than half an hour at midday after the White House expressed its concern about the violence in Egypt. The State Department advised Americans to avoid non-essential travel to Egypt, and many airlines canceled flights in and out of the country.
Anxious traders pulled money from other assets to buy oil, gold and the dollar, which are considered less risky in uncertain times.
“This is definitely a flight into safety,” said Rich Ilczyszyn, a senior market strategist with futures brokers Lind-Waldock.
The uprising in Egypt follows protests this month that forced out the president of Tunisia, who fled to Saudi Arabia. Anti-government protests have also rocked Lebanon and Yemen.
“I think it’s just kind of the feeling that this could continue to spread, or just the whole nervousness about the region, not that there’s any specific cutoff of supplies or anything like that,” said Tom Bentz, an analyst at BNP Paribas Commodity Futures.
Bentz said a lot will depend on what happens over the next few days. “Are we going to see a regime change? Are we looking at cutoffs of supplies? I think it’s just one of those things you have to watch closely,” he said.
Oil prices started to rise earlier Friday after the Commerce Department said the economy got stronger at the end of last year as Americans spent at the fastest pace in four years and U.S. companies sold more overseas. In 2010 the economy grew 2.9 per cent, the most since 2005.
Americans already have started watching their budgets and adjusting their spending as gasoline prices stay above US$3 a gallon. Analysts are concerned that lingering high prices will force consumers to take more steps to conserve, which would affect the economic recovery.
In other Nymex trading in March contracts, heating oil gained 3.9 cents to settle at US$2.6942 a gallon, gasoline added 7.27 cents to settle at US$2.4859 a gallon and natural gas picked up 4 cents to settle at US$4.323 per 1,000 cubic feet.
In London, Brent crude added US$2.03 to settle at US$99.42 a barrel on the ICE Futures exchange.
