OIL FUTURES: Nymex Trades Above $100/Bbl On Mideast Supply Fears

SINGAPORE (MarketWatch) -- Crude oil futures in Asia rose Wednesday, with Nymex crude trading above $100 a barrel as investors grew more concerned about the impact of Libya's oil export shortfall and that political unrest could spread to other countries in the Middle East.

"The fear is not that the unrest will spread south--into the second tier of African states from the Western Sahara and Mauritania east into Eritrea, Ethiopia and Somalia--but that it will spread due east into the Arab Middle East and Persia," said Peter Beutel, president of Cameron Hanover, in a note to investors.

So far, though, the United Arab Emirates, Kuwait and the Kingdom (of Saudi Arabia) have resisted the tide of unrest that has swept across the region like a sandstorm."

On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at $99.87 a barrel at 0657 GMT, up $0.24 in the Globex electronic session. April Brent crude on London's ICE Futures exchange rose $0.10 to $115.52 a barrel.

"The risk premium embedded in the oil price not only reflects the current situation in Libya, but also includes the potential for political upheaval to affect oil production in neighbouring and Gulf countries," BNP Paribas analysts said n a note to investors. "To date, it is still difficult to tell with a reasonable degree of certainty the actual outage in production and exports in Libya."

The quality and not just the quantity of Libya's oil is in focus, the analysts added.

Libya's main export grade is Es Sider, a light sweet crude. However, only members of the Organization of Petroleum Exporting Countries such as Saudi Arabia have the spare capacity to fill both the quality and quantity gap left by Libya, they said.

"Of Saudi Arabia's 3.5 million-barrels-a-day of spare production capacity in January, we do not know how much Arab Extra Light is available," the analysts said. "How much demand will spill over to other regional crude oils will depend on whether oil companies will choose to temporarily run down inventory."

Nymex reformulated gasoline blendstock for April--the benchmark gasoline contract--rose 157 points to $2.9991 a gallon, while April heating oil traded at $3.0252, 17 points higher.

ICE gasoil for March changed hands at $954.00 a metric ton, up $13.25 from Tuesday's settlement.

(Source: http://www.marketwatch.com/story/oil-futures-nymex-trades-above-100bbl-on-mideast-supply-fears-2011-03-02)