Oil prices registered gains on Wednesday, the 30th of March 2011, as fears about the Libyan crisis prolonging for a long time overtook rising oil supplies in the US. WTI crude future rose by 0.35 percent to USD $ 104.63 a barrel, while Brent crude for May delivery rose by 0.33 percent to USD $ 115.51 a barrel.
After making advances towards Muammar Qadhafi’s hometown of Sirte, Libyan rebels were forced to retreat back following heavy artillery attack from Qadhafi’s forces, who were also able to wrestle back control of the oil port of Ras Lanuf from the rebels. The Western forces aiding the rebels via imposing a no-fly zone over Libya have been unable to carry out air strikes for the past two days on account of bad weather. Oil production from Libya has been heavily hampered, and fears about a long, drawn out crisis in Libya are resulting in speculative behavior from the investors, leading to the price hike.
Data released from the Energy Information Agency (EIA) showed that oil stockpiles at Cushing, Oklahoma, increased by 4.2 percent to currently stand at 41.9 million barrels, while total crude oil inventories in the US increased by 2.95 million barrels to their current level of 355.7 million barrels. On the other hand, fuel demand decreased by 3.7 percent to 18.6 million barrels a day. Even though uncertainty surrounding the Libyan crisis was able to counter these signs of the market having sufficient supply, it is expected that the risk-premium arising from the Middle East unrest will decrease over time, leading to a reduction in oil prices to their normal levels.