Oil prices peaked close to a 30-, month high in the market on Wednesday, as the US and other Western Allies continued bombing pro government forces in Libya. The market closed with Brent at USD $ 115.17 a barrel, WTI at USD $ 105.25 a barrel and West Texas, Sour Midlands at USD $ 101.50 a barrel.
Although the levels of crude oil stockpiles in the US was increasing, and the Middle East crisis is currently not affecting production in any major oil producing country apart from Libya, the oil prices are increasing on account of fear premium. Currently, market fundamentals are not playing a role in causing oil prices to change; rather, it is the anticipation of what the investors believe will occur in the Middle East that is causing the market prices to move upwards.
An idea of just how volatile the oil market is right now can be gauged by from the fact that even the bombings in Jerusalem yesterday resulted in an increase in oil prices.