Oil prices rose to their highest since September 2008 on Monday, with Brent surging above $121 a barrel as Nigerian election delays and a short-lived strike in Gabon joined a list of geopolitical supply concerns. Prices rose for a third session on persistently weak volume, with Brent leading gains after news of delays to loading benchmark Forties crude.
Libya's ongoing civil war and the latest signs of unrest in Yemen also affected the European market more intensely, traders said. The latest gains snapped prices out of a month-long trading range, once again shifting the focus to Opec. The oil minister of Iran, which holds the group's rotating presidency in 2011, said Friday there was no need for a meeting.
Brent crude for May rose $2.36 to settle at $121.06 after reaching $121.29, the highest intraday price since August 2008. Several cargoes of Forties crude - which typically sets the level of dated Brent benchmark - loading in April are delayed due to a brief drop in North Sea Buzzard oilfield production last week, trading sources said.
US crude rose 53 cents to settle at 108.47 after reaching $108.78 intraday, the highest intraday price since September 2008. "Brent is up on Libya, Yemen unrest and the Nigerian election," said Phil Flynn, analyst at PFGBest Research in Chicago. "US crude is hesitant because there is still worry that the Federal Reserve might be nearing a rate hike or tighter policy, which would lower liquidity and demand and strengthen the dollar," he added.
The US Federal Reserve is set to end the second round of its bond buying program in June, and some Fed officials have argued for a move away from the loose monetary policy. US oil prices have risen 4 percent in three days, aided by a government report last Friday that US employment registered solid growth for a second month in March and the jobless rate hit a two-year low of 8.8 percent. Many analysts now say oil prices are likely to continue to trade above $100 a barrel, supported by rising production costs and higher budgetary requirements in Saudi Arabia, making the world's top exporter less inclined to raise production to cool prices.
But it's unclear where prices might peak, given Opec's reluctance to formally act to raise production targets despite exports being lost to Libya's civil war and concerns that high oil prices are stoking inflation. US crude trading volumes remained thin after the previous two weeks saw the lowest weekly volumes for 2011.
Brent trading volumes on the Intercontinental Exchange were below the 30-day average and less than 10,000 lots below US crude volumes on the New York Mercantile Exchange, with less than two hours of post-settlement trading left on Monday. Oil investors also eyed Opec member Nigeria, where parliamentary and presidential elections were postponed for one week after failing to arrange logistics in time. Nigeria, a key sweet crude producer, has a history of contentious elections and problems with militants.
Also in Africa, the oil workers union called off a strike in Gabon that had halted production of around 240,000 barrels per day of mainly low sulfur crude oil. The union said it reached a deal with the government. And news that the strike in Gabon was called off came after crude prices had settled. Forces loyal to Libyan leader Muammar Qadhafi are staging a "massacre" in the besieged city of Misrata, evacuees said Monday, as Turkey sought to broker a cease-fire to halt the bloodshed.
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