Oil extends gains as protests continue

SYDNEY (MarketWatch) -- Light sweet crude oil futures extended gains in electronic trading on Tuesday, as demonstrations continued in the Middle East and North Africa and key oil producers moved to curb output in Libya.

Oil for March delivery (CLH11 93.58, +7.38, +8.56%), the front of month contract which expires later Tuesday, gained $6.26 or 7.3% to $92.46 a barrel in electronic trading on the New York Mercantile Exchange on Tuesday.

Oil for April delivery (CLJ11 97.52, +7.81, +8.71%) , the more actively traded contract, rose $6.47 or 7.2%, to $96.18 a barrel.

“Rising violence in Libya and Bahrain are providing support to oil prices, with geopolitics a key focus of the market,” wrote strategists at Barclays Capital in a note.

In Libya, violent clashes between police and protesters spread to Tripoli and autocratic leader Moammar Gadhafi appeared to lose control of some eastern parts of the country, The Wall St Journal reported on its website.

The newspaper also reported that Wintershall, the oil and gas exploration arm of Germany’s BASF AG(DE:BAS 59.20, -0.40, -0.67%) (BASFY 84.18, +1.11, +1.34%) and one of the largest operators in Libya, was shutting around 100,000 barrels a day of output.

Libya is the largest oil producer in North Africa, at 1.6 million barrels of crude oil a day, and exports around 1.1 million barrels a day, according to Commerzbank strategists.

The nation is the latest in a string of countries within the region and the Middle East to experience political uprisings in recent weeks.

The escalation of violence in the region prompted ratings agencies to cut the credit ratings of Libya and Bahrain on Monday.

(Source: http://www.marketwatch.com/story/oil-extends-gains-as-protests-continue-2011-02-21)