Oil edges above $100 on concerns about Russia, Libya
Oil prices edged above $100 a barrel Tuesday on supply concerns tied to the possible widening of sanctions against Russia and the prolonged difficulties of Libya's oil industry.
By early afternoon in Europe, benchmark oil for May delivery was up 50 cents to $100.10 in electronic trading on the New York Mercantile Exchange. On Monday, the Nymex contract added 14 cents to close at $99.60.
Brent crude, used to set prices for international varieties of crude, was up 37 cents to $107.18 on the ICE Futures exchange in London.
The U.S. and other Group of Seven countries vowed to launch coordinated sanctions on key parts of the Russian economy, which could include the energy industry, if Russian President Vladimir Putin presses further into Ukraine after the annexation of the Crimean Peninsula.
Russia is a key supplier of oil and natural gas to Europe, with some eastern countries like Poland and Bulgaria nearly fully dependent on Russian energy supplies.
Libya, meanwhile, continues to have production problems. Its high-quality crude is used by European refiners has been scarce since the 2011 civil war which ousted Moammar Gadhafi.
"With Libya production almost fully out and sanctions against Iran, Europe is anyway not in a position to sanction Russia on the oil side," said Olivier Jakob of Petromatrix in Switzerland. "Apart from the offshore fields, the production in (Libya) is now basically out."
A dismal preliminary report on factory activity in China also continued to weigh on sentiment. The HSBC-Markit purchasing managers' index fell to an eight-month low in March, further evidence of the prolonged slowdown that could lead to lower demand for energy in the world's No. 2 economy. A similar index for the U.S. fell from a four-year high.
Prices could retreat further if forecasts for a tenth consecutive increase in U.S. stockpiles of crude oil are confirmed.
Data for the week ending March 21 are expected to show a build of 2.6 million barrels in crude oil stocks and a draw of 1.8 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The industry-funded American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration the market benchmark will be out on Wednesday.
In other energy futures trading on Nymex:
Wholesale gasoline added 1.6 cents to $2.9017 a gallon.
Heating oil rose 1.95 cents to $2.9297 a gallon
Natural gas advanced 8.2 cents to $4.358 per 1,000 cubic feet.