US oil prices rise above US$60 on Libya strife

[NEW YORK] US oil prices shot up above US$60 a barrel for the first time this year Tuesday as reports of rising tensions in petroleum-producer Libya fueled bullish momentum.

US benchmark West Texas Intermediate for delivery in June jumped US$1.47 to US$60.40 a barrel on the New York Mercantile Exchange.

European benchmark Brent oil for delivery in June advanced US$1.12 to US$67.52 a barrel in London.

"It's been strong all day," said John Kilduff, founding partner at Again Capital. "Sixty dollars was a psychological level that got eclipsed." Mr Kilduff and other analysts cited reports that protests in Libya had shut oil deliveries to a port in the eastern part of the North African country.

The Libya news "was the catalyst we basically needed," Mr Kilduff said.

Mr Kilduff said oil was also lifted by worries about stability in the broader Middle East due to ongoing strife in Yemen and news that US naval forces have begun accompanying US ships in the Strait of Hormuz after Iran seized a cargo vessel.

But Citi Futures analyst Tim Evans noted that oil traders have generally been in a more bullish mindset since US crude prices skidded below US$45 a barrel in mid-March.

"The petroleum markets are on the upswing, with headlines on a drop in Libyan crude oil production due to protests helping to justify the advance," Mr Evans said in a note.

"It's worth noting, however, that to some extent it is the rally in price that is driving the search for bullish news rather than genuine risk of market tightness."

Wednesday's US oil inventory report could lend further upward momentum given the reaction to recent storage reports, where "any minor decline in production or even a slowing in the rate of stock accumulation is deemed as bullish," Mr Evans added.

AFP