Oil tops US$104 per barrel

Oil prices rose above US$104 per barrel at midday Tuesday as traders continued to focus on a series of international crises that will drive world supply and demand this year.

Benchmark West Texas Intermediate for May delivery added $1.18 at US$104.27 per barrel on the New York Mercantile Exchange.

In London, Brent crude gained 93 cents at US$115.84 per barrel.

Energy economists continue to gauge how recent unrest in Libya, Bahrain, Yemen and Syria will affect oil production. Libya, which produces enough oil to meet nearly two per cent of world demand, has almost totally stopped shipping it as rebels battle pro-Gaddafi forces.

The addition of international forces, including the US, could mean that the country will be embroiled in a protracted conflict that will keep oil fields offline much longer than previously expected, energy experts said.

In Yemen, embattled President Ali Abdullah Saleh pledged to step down more than a year early, but his refusal to leave immediately infuriated tens of thousands of demonstrators. Yemen is an important transfer point for global oil supplies.

Tensions high

"Tensions are still pretty high in that entire region, so prices are going to stay above US$100 per barrel for a while," PFG Best analyst Phil Flynn said.

Iraq's new oil minister said Tuesday that he expects oil to reach US$120 a barrel. Iraq produces about 2.4 million barrels of oil per day.

Meanwhile, Japan continues to stabilise the Fukushima Dai-ichi nuclear complex that was damaged and leaking radiation following this month's earthquake and tsunami.

Bank of America analyst Sabine Schels said the country will lean on other power generators that run on liquefied natural gas and oil to make up for the loss of its nuclear facilities.

Increase imports

Schels estimated that Japan will increase imports of liquefied natural gas between 706 million and 848 million cubic feet per day to partially replace power lost from damaged nuclear reactors. Royal Dutch Shell is among oil companies shipping more crude and LNG to Japan to help offset power shortages.

Japan's increased imports are expected to push world natural gas prices higher, though large global supplies should prevent them from spiking above US$13 per 1,000 cubic feet as they did in 2008.

Schels expects natural gas prices to average around US$4.48 per 1,000 cubic feet this year. In midday trading on the Nymex, natural gas for April delivery gained four cents at US$4.198 per 1,000 cubic feet.

In other Nymex trading the April contract for West Texas Intermediate crude climbed 98 cents to $103.31 on its final day of trading.

- AP