Oil rises nearly four percent

Oil prices rallied nearly 4 percent on Thursday on fears of further escalation of geopolitical tension in the Middle East and North Africa. Oil prices recovered for a second day from three-week lows, which had been sparked by prospects of lower oil demand from earthquake-stricken Japan, and was part of an advance across markets on worries about increasing geopolitical risks, analysts said.
The oil-heavy Reuters-Jefferies CRB index of 19 commodities rose more than 3 percent, its biggest one-day gain since August 2009. "The focus is back on continuing unrest in the Middle East and what will be a lot of disruption in Libya for a long time," said Christopher Bellew, an oil trader at Bache Commodities. Brent crude for May delivery settled at $114.90, gaining $4.30 or 3.89 percent, after hitting a session high of $115.39. It was the biggest one-day percentage gain since February 23. Volume at the close was 313,317, lowest since February 21, according to Reuters data.
Brent crude hit a 2-1/2 year high of $119.79 on February 24, on concerns about Libyan production outages as a rebellion seeking his ouster gathered momentum. US crude for April delivery settled up $3.44, or 3.51 percent, at $101.42 a barrel, after rallying to $101.99. It was also the biggest one-day percentage gain. By 3:19 pm EDT (1919) US crude's volume was 513,490, lowest level since January 3. according to Reuters data, with about two hours left of the day's trading.
US crude's sharp rise was also aided by upbeat data on jobless benefit claims and factory activity in the Mid-Atlantic region. Data showing that inflation remained contained despite rising prices also helped boost investor mood. The UN Security Council scheduled a vote on Thursday evening on a resolution that Britain said would authorise all steps in Libya short of a military occupation to protect Libyan civilians. The vote was scheduled for 6 pm EDT (2200 GMT).
Ahead of the vote, Libyan state TV quoted a statement from Libya's Defence Ministry as saying "any foreign attack on Libya will endanger air and maritime traffic in the Mediterranean basin and expose both short and long term risks." "The headlines about Libya's response to any potential foreign military act and the crackdown of protesters in Bahrain are adding fuel to the fire and heightening tensions in the Middle East, said Tom Knight, trader at Truman Arnold in Texarkana, Texas.
"Prices have extended higher from yesterday, also aided by positive US economic data today." Bahrain arrested seven opposition leaders, a day after its crackdown on protests among the Shia Muslim majority drew rare US criticism and raised fears of a regional conflict. In Japan, Japanese engineers worked through the night to lay an electricity cable to a damaged nuclear power plant in the hope of restarting pumps desperately needed to pour cold water on overheating fuel rods and avert a catastrophe.