Oil prices near $120 on demand expectations Updated: 13:06, Monday, 4 April 2011

Oil closed in on $120 today, on expectations of higher demand as strong US jobs data offset concerns over Middle East supplies.

Oil prices closed in on $120 today, hitting two-and-a-half-year highs on expectations of higher demand as strong US jobs data offset concerns over Middle East supplies.

Brent North Sea crude reached an intra-day high of $119.75 a barrel. It later pulled back, with the May contract at $119.31, up 61 cents from Friday's close.

New York's main contract, light sweet crude for delivery in May, reached $108.78 a barrel - the highest level since September 2008. It went on to stand at $108.40 later this morning, up 46 cents from Friday.

Over 200,000 jobs were created and unemployment fell to 8.8% last month in the US, the world's biggest oil consumer, official data showed on Friday.

Analysts said that traders had already priced in supply disruptions due to the ongoing Libyan conflict but warned of the effects of any spillover into the oil-rich Middle East.

OPEC member Kuwait said today that oil prices were too high because of unrest in the Middle East and Japan's earthquake.

'Although we are enjoying high prices, we would like to see lower prices. We would like to see a normal oil price,' the CEO of national conglomerate Kuwait Petroleum Corp (KPC), Faruq al-Zanki, said. He said a 'normal oil price would be between $90 and $100' a barrel.

In Libya today, rebel forces made a new attempt to recapture the oil town of Brega, advancing under artillery fire, as hundreds wounded in Libya's besieged third city Misrata were evacuated by ship.

Brent crude rose towards $120 a barrel and US crude hit a two-and-a-half-year high above $108 this morning as unrest in the Middle East and North Africa kept the focus on oil supplies as economic growth bolstered demand.

Comments by Iran's oil minister that there was no need for the Organisation of the Petroleum Exporting Countries to hold an extraordinary meeting also supported prices. Iran is OPEC's leading oil price hawk and holder of the cartel's rotating presidency in 2011.

Brent rose $1.05 to a high of $119.75 a barrel, its highest since February 24, before slipping back to trade around $119.50. US crude was up 70 cents at $108.64 a barrel, after touching $108.78 earlier in the session, its highest since September 2008.

Analysts said the loss of oil from Libya has been more or less offset by Saudi Arabia, while the Japanese crisis should also reduce oil import demand.

The government of Libya - the world's 17th-largest oil producer and Africa's third-largest - has sent an envoy to Greece to discuss an end to fighting, but gave no signs of any major climb down in a war that has ground to a stalemate between rebels and forces loyal to Muammar Gaddafi.

In Yemen, police using live rounds and tear gas wounded hundreds of protesters marching on a presidential palace in the Red Sea city of Hudaida today in a sign of fraying nerves as the political crisis deepened.

Oil got a boost at the end of last week from strong US payrolls data. US employment grew firmly for a second month in March in a row and the jobless rate hit a two-year low of 8.8%, fuelling optimism about oil demand.

(Source: http://www.rte.ie/news/2011/0404/oil-business.html)