Oil Settles at Highest Level Since Sept. 2008Oil prices rose past $104 a barrel to end the week at a 29-month high, as fighting in Libya intensified and the world's largest petroleum consumer, the U.S., reported that employers added nearly 200,000 new jobs in February.
By: Chris Kahn, Associated Press
NEW YORK (AP) — Oil prices rose past $104 a barrel to end the week at a 29-month high, as fighting in Libya intensified and the world's largest petroleum consumer, the U.S., reported that employers added nearly 200,000 new jobs in February.
The Labor Department said Friday that the unemployment rate dropped to 8.9 percent in February. While that's positive news for the economy, the report also suggests that more people are driving to work at a time when world oil supplies are under pressure because of unrest in Libya and the Middle East.
Benchmark West Texas Intermediate crude for April delivery gained $2.51 to settle at $104.42 per barrel in New York, the highest level since Sept. 26, 2008.
Gasoline prices have shot up an average of 35 cents per gallon since an uprising in Libya began in mid-February. A gallon of regular gained another 4.4 cents overnight to a new national average of $3.471 per gallon, according to AAA, Wright Express and the Oil Price Information Service.
Pump prices are soaring much faster than analysts expected as rebellions sweeps across North Africa and the Middle East. Prices should peak between $3.50 and $3.75 per gallon this spring, according to Tom Kloza, OPIS chief oil analyst.
Most of Libya's oil production has been shut down because of the crisis, and experts say the country's oil fields will be threatened as long as there's no clear leader in charge.
Tensions escalated on Friday as forces loyal to Moammar Gadhafi used tear gas against protesters in Tripoli. Rebels also attacked the oil port of Ras Lanouf, about 380 miles east of Tripoli. They battled with about 3,000 pro-Gadhafi troops, mainly around the facility's airstrip. As night fell it was not clear who was in control of the complex. Earlier in the week, rebels pushed back Gadhafi forces from a larger oil facility.
Saudi Arabia has increased production to make up for the loss of Libyan crude, but a lengthy struggle could put significant pressure on world supplies. Traders are concerned that anti-government protesters will further challenge neighboring regimes in the region. North Africa and the Middle East are home to the largest oil producers on earth and export a quarter of the world's oil.
Meanwhile anxious traders prepared for a weekend of uncertainty. Two weeks ago oil surged more than $7 per barrel in electronic weekend trading. The possibility that oil will jump again before Monday trading begins kept prices up.
Oil is getting more expensive as the U.S. economy continues on the road to recovery. Besides the lower unemployment rate last month reported by the government, retailers said they had surprisingly strong revenue gains in February and businesses ordered more manufactured goods from U.S. factories in January.
The Energy department said this week that petroleum demand has grown for four straight weeks, resulting in unexpected drops in the nation's oil and gasoline supplies last week.
"The economy just seemed to be getting its mojo back," PFGBest analyst Phil Flynn said. "The question, now, is when will higher energy prices take that mojo away?"
Analysts say the economy can probably stay on the upswing as long as oil remains below $120 per barrel. If it goes higher, and pushes up the cost of fuel, consumers could rein in spending, more commuters may opt for public transportation and car pools, and leisure travelers will probably vacation closer to home.
"That's when it really starts to do damage," Flynn said.
If oil rises to $150 or more per barrel, and holds at that level for months, some economists think another recession could be triggered.
In other Nymex trading for April contracts, heating oil added 4 cents to settle at $3.0893 per gallon and gasoline futures gained 2.02 cents to settle at $3.0464 per gallon. Natural gas picked up 3.1 cents to settle at $3.809 per 1,000 cubic feet.
In London, Brent crude rose $1.18 to settle at $115.97 per barrel on the ICE Futures exchange.
Associated Press Writer Maggie Michael contributed to this story from Tripoli, Libya.