Oil prices were on the rise for the better part of the week, with Brent crude once again creeping close to US$120/barrel.
The prices were driven by the continuing unrest in the Middle East and North Africa, which has triggered a civil war in the oil rich Libya. Forces loyal to the country’s long time ruler Muammar Gaddafi have just taken over the oil port of Ras Lanuf and are preparing to launch an assault on the east of the country, currently held by the opposition.
The unrest has slashed Libya’s oil output by about 1 million barrels per day, sparking fears of a supply shortfall. Saudi Arabia had to intervene and raise production. Other OPEC members including the United Arab Emirates, Iraq, Iran and Kuwait later followed suit to push down the surging prices.
Crude oil futures declined sharply at the end of the week on the news that China posted a trade deficit of US$7.3 billion in February, the largest in seven years as imports unexpectedly dropped and exports rose.
The data raised concerns that demand for oil from the world’s second largest energy consumer could soon fall. In addition to that, this week’s inventories report from the US Department of Energy showed a larger than the expected buildup of 2.52 million barrels in crude oil stockpiles in the US.
The macroeconomic data that came out this week put more pressure on oil prices. On Thursday, a report from the US Department of Labor revealed that initial jobless claims rose 26,000 to 397,000 last week, suggesting a sluggish recovery in the job market.
April Brent crude retreated to US$113.44/barrel on the ICE Exchange.
US light, sweet crude for April delivery fell to US$101/barrel on the New York Mercantile Exchange (NYMEX).
BP (LON:BP) dropped from 493 pence to 468 pence and fellow supermajor Shell (LON:RDSB) retreated from 2,190 pence to 2,100 pence.
BG Group (LON:BG) fell from 1,476 pence to 1,460 pence, Cairn Energy (LON:CNE) declined from 439 pence to 429 pence and Tullow Oil (LON:TLW) slipped from 1,484 pence to 1,388 pence.