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Oil rises as Libya disruptions counter U.S. glut

Oil&Gas Materials 31 March 2011 12:17 (UTC +04:00)

Azerbaijan, Baku, March. 31 / Trend /

Oil rose, heading for a third quarterly gain in New York, as concern the Libyan conflict will prolong production cuts countered signs of rising supplies in the U.S., the world's largest crude consumer, Bloomberg reported.

Prices advanced as much as 0.5 percent today after troops loyal to Libyan leader Muammar Qaddafi forced rebels to retreat as the U.S. and U.K. said they would consider arming opposition forces. Crude stockpiles climbed to a record last week at the delivery point for U.S. futures and fuel consumption fell, according to an Energy Department report yesterday.

"Investors are torn between the inventory levels in the U.S. and event risk in the Middle East," said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. "Inventory levels are continuing to build and demand continues to fall, which suggest to me that the market has ample supply."

Crude for May delivery advanced as much as 50 cents to $104.77 a barrel in electronic trading on the New York Mercantile Exchange. It was at $104.67 at 10:55 a.m. Singapore time. Yesterday, the contract fell 52 cents to settle at $104.27. Futures have increased 15 percent between January and March, the strongest first quarter since 2005. Prices topped $106 three times this month before retreating.

Brent oil for May settlement on the London-based ICE Futures Europe exchange rose as much as 46 cents, or 0.4 percent, to $115.59 a barrel. Prices are up 22 percent this quarter. The European benchmark traded at a $10.86 premium to U.S. futures, from a record $19.54 on Feb. 21. The gap has averaged 76 cents last year and $10.98 in the first three months of the year.

Oil supplies at Cushing, Oklahoma, where New York-traded West Texas Intermediate grade is delivered, increased by 1.69 million barrels, or 4.2 percent, to 41.9 million, according to the Energy Department. That's the highest in records since 2004.

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