Oil market jumps on Libya unrest

[LONDON] Brent crude prices rallied on Tuesday on unrest in crude producer Libya, but gains were tempered by oversupply worries on the eve of weekly US stockpiles data, dealers said.

European benchmark Brent North Sea crude for April delivery won US$1.68 to US$61.22 per barrel in London late afternoon deals.

New York's West Texas Intermediate (WTI) for April added 73 cents to US$50.32 a barrel.

Militia warplanes attacked a major oil export terminal in Libya on Tuesday, but were driven off by anti-aircraft fire without being able to hit their targets, a spokesman for guards there said.

In response, planes from the air force of the internationally recognised government struck Tripoli's militia-controlled Mitiga airport without causing any casualties.

The Al-Sidra terminal that was targeted is under the control of that government.

"Libyan crude production has once again been subject to disruptions," noted PVM analysts in a note to clients.

At the same time, WTI prices were held back by expectations of building US crude inventories.

"WTI is under-performing Brent ahead of the latest crude stocks data on Wednesday expected to show another increase after last week's record stockpile of US oil," added CMC Markets analyst Jasper Lawler.

The US government's Department of Energy will publish Wednesday its report on commercial crude inventory levels for the week ending February 27.

The DoE had revealed last week that US oil reserves surged by a bigger-than-expected 9.4 million barrels to a record 434.1 million barrels in the week to February 20.

In earlier deals on Tuesday, oil market gains were limited as dealers sat on the sidelines eyeing negotiations aimed at ending a strike at some US crude refineries.

Talks to settle a strike by workers at three major US refineries operated by Royal Dutch Shell are set to restart on Wednesday following a stalemate on February 20.

More than 5,000 workers spread across around a dozen installations have been on strike since February 1 demanding improved wages and safety conditions.

Dealers were also monitoring fresh marathon talks in Switzerland between the United States and crude producer Iran over Tehran's controversial nuclear programme.

The Islamic republic has been crippled by a series of UN and US sanctions, including on crude exports, aimed at bringing an end to its nuclear drive, which the West claims is being used to develop atomic weapons. Iran denies the claims.

The pace and intensity of the negotiations to hammer out a deal to rein in the nuclear programme in exchange for sanctions relief have gathered pace as a March 31 deadline for a political accord nears.

AFP