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Oil prices hit $100 per barrel
Libya revolt pushes oil past $100 per barrel for the first time since Oct. 2008

NEW YORK (AP) -- Oil prices hit $100 per barrel for the first time since 2008, driven by growing concerns about global supplies, as Libya's Moammar Gadhafi continued to lose his grip on the oil-rich country.

Similar uprisings in Tunisia and Egypt earlier this month already had markets on edge before protests escalated in Libya, which has the biggest oil reserves in Africa. The rebellion widened Wednesday as protesters overwhelmed government buildings and advanced around Tripoli, the capital.

West Texas Intermediate crude for April delivery jumped $2.68, or 2.8 percent, to settle at $98.10 per barrel on the New York Mercantile Exchange. Earlier in the day, prices hit triple digits for the first time since Oct. 2, 2008. WTI has soared 18 percent since Valentine's Day.

In London, Brent crude added $5.47, or 5 percent, at $111.25 per barrel on the ICE Futures exchange.

French oil giant Total said it started to wind down its oil production in Libya, which produced an average of 55,000 barrels per day last year. That follows similar moves by other oil companies working in the country.

Libya's biggest oil producer, Eni, idled operations that produce 244,000 barrels of oil and gas per day. Spain's Repsol-YPF and Austrian oil company OMV also suspended operations. Germany's Wintershall said it suspended operations that produced up to 100,000 barrels of oil per day. Evacuations of oil company employees and their families continue.

Barclays Capital estimates that as much as 1 million barrels per day of production has been shut down so far. In January, Libya produced almost 1.7 million barrels per day of oil and natural gas liquids, according to the International Energy Agency.

The production losses will be felt mostly in Europe. Ireland relies on Libya for 23 percent of its oil imports and 22 percent of Italy's oil imports are from Libya. The U.S. imported only about 51,000 barrels per day from Libya, less than 1 percent of its total crude imports.

The International Energy Agency and Saudi Arabia have both pledged to make additional oil available to cover any shortfall in world supplies, but that hasn't eased tensions in oil markets.

Larry Goldstein, a director at the Energy Policy Research Foundation in Washington, said Libya's oil is a high-quality variety that produces valuable petroleum products like gasoline, jet fuel and diesel. Some refineries won't be able to run on Saudi Arabia's lower-grade crude, so a sustained shut down in Libya could start a bidding war for comparable kinds of crude.

"That would raise product prices immediately," Goldstein said.

Analysts say concerns about violence in North Africa and the Middle East have added a "fear premium" of about $10 per barrel of oil.

The rise has pushed retail gasoline prices higher in the U.S. despite ample supplies in most parts of the country.

Gasoline prices jumped 8.2 cents per gallon in the last month and $1.28 per gallon in the last year. The national average for a gallon of regular on Wednesday rose another 2.3 cents to $3.194, according to AAA, Wright Express and Oil Price Information Service.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, said he expects gasoline prices will continue to rise in the next few months to a spring peak of between $3.25 and $3.75 per gallon. And energy analyst Jim Ritterbusch said he doubts the national average will climb to $4 a gallon or higher, but he added that prices are difficult to predict because of the rapidly changing Middle East situation.

Looking beyond the unrest in Libya, analysts are watching similar protests in Bahrain, a tiny country about 15 miles from Saudi Arabia. Barclays analyst Helima Croft said the uprising in Bahrain could spill over to the eastern provinces of Saudi Arabia. While it probably won't hurt the Saudi's huge oil-production operations, "it's going to make a lot of people nervous," Croft said.

Shares of major oil companies rose in Wednesday trading. Exxon Mobil gained $1.89, or 2.2 percent, at $87.33. ConocoPhillips added $2.07, or 2.7 percent, at $78.68. Chevron rose $2.29, or 2.3 percent, to $102.61. Occidental Petroleum rose $1.28 to $103.42.

In other Nymex trading in March contracts, heating oil added 11.3 cents to settle at $2.9166 per gallon and gasoline gained 12.1 cents to settle at $2.8677 per gallon. Natural gas picked up 2.9 cents to settle at $3.936 per 1,000 cubic feet.

Tuesday, February 22, 2011...


•   March crude oil prices this morning are trading sharly higher by $6.85 a barrel and March gasoline +8.77 cents per gallon. Crude and gasoline prices surged to 2-1/3 year highs in overnight trade as violence escalates in Libya, owner of Africa's biigest oil reserves. Crude oil and gasoline prices last Friday settled mixed after China's action to raise banks' reserve requirements was offset by continued unrest in the Middle East: CLH11 -$0.16, RBH11 +2.36.

               Bullish factors included (1) the drop in the dollar index to a 1-week low, which boosts investment demand for commodities, (2) heightened tensions in the Middle East as escalating protests in Bahrain and Libya fueled concern that supplies from oil-producing countries in the Middle East will be disrupted, and (3) the rally in the S&P 500 to a 2-1/2 year high, which boosts confidence in the economic outlook and energy demand.

               Bearish factors included (1) the action by China to raise banks' reserve ratios for the se cond time this year, which may slow is economy and fuel demand, and (2) the action by Deutsche Bank AG to cut its price forecast for WTI crude this year to $91 a barrel from a previous forecast of $96 and to cut ni goldits 2012 WTI crude price forecast to $95 a barrel from an earlier forecast of $98 a barrel.

Wednesday, February 23, 2011...

•   April crude oil prices this morning are trading up +50 cents a barrel and April gasoline is +3.21 cents per gallon. Crude oil and gasoline prices yesterday surged to 2-1/3 year highs and closed sharply higher on concern that violent unrest in Libya may disrupt crude supplies: CLJ11 +$5.71, RBJ11 +5.63.

                Bullish factors included (1) an escalation of violent civil unrest in Libya, owner of Africa's biggest oil reserves, which fueled concern that crude supplies from Libya may be disrupted, (2) Iran's action to sail 2 warships through the Suez Canal, which Israel considers "a provocation," and (3) concern that the ongoing civil unrest in North Africa and the Middle East will spread to the oil-producing areas of the region and disrupt global crude supplies.

                Bearish factors included (1) strength in the dollar, which may limit investment demand for commodities, and (2) comments from Saudi Arabian Oil Minister Ali al-Naimi who said OPEC is ready to step in to meet an y shortage in oil supply resulting from a disruption in crude shipments from Libya and that global oil markets have sufficient supply and prices at $70 to $80 a barrel would be "fair" for producers and consumers alike.

Late rebound on oil drop shows bulls still kicking...

By Ryan Vlastelica Ryan Vlastelica – 19 mins ago
NEW YORK (Reuters) – Bruised but not bowed, bulls staged a rebound on Thursday and helped stocks stabilize in a volatile session suggesting investors aren't ready to give up on the market's rally.

The S&P 500 recovered off early lows triggered by deepening concerns that higher oil could stifle economic activity. Stocks hit their worst levels when Brent crude neared $120 a barrel on Libya's turmoil.

The S&P inversely tracked oil prices and a late-day drop in crude resulted in a corresponding recovery in equities. The index is down 2.7 percent for the week so far, but investors believe the market could regain its footing at this level.

The rebound "suggests that there is still some buying support," said David Joy, chief market strategist at the Boston-based Columbia Management, which oversees $347 billion. "Libya was a good reason to trigger a pullback, but I don't think anyone has changed their mind on the recovery because of this."

Trading volume has risen in the past few sessions, following a period of anemic action that saw stocks hit 30-month highs. The S&P is up 24 percent since the start of September. About 8.90 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, above last year's daily average of 8.47 billion.

Kenneth Fisher, a billionaire investor who oversees $41 billion at the Woodside, California-based Fisher Investments Inc, agreed that there was a base of support for equities.

"People keep underestimating how strong the economy is right now," he said. "The potential short-term hiccups are the kind of disruption that the economy can easily absorb."

Oil has risen about 12 percent over the past three sessions. The sharp rise has fueled worries about the impact of energy costs on economic activity.

Oil futures were at their highest since late August 2008 as the escalating problems in Libya disrupted supply. Brent rose near $120 in intraday trading though it later pulled back to $111.12 in a sell-off sparked by rumors that Libyan leader Muammar Gaddafi had been shot.

"If oil or Brent go up to $120 per barrel and stay there, that would be cause for revisiting our expectations for how robust the recovery will be," Joy said. "That seems to be the level where you have to start thinking about how to change your position."

The Dow Jones industrial average (.DJI) fell 37.28 points, or 0.31 percent, to 12,068.50. The Standard & Poor's 500 Index (.SPX) slipped 1.30 points, or 0.10 percent, to 1,306.10. The Nasdaq Composite Index (.IXIC) rose 14.91 points, or 0.55 percent, to 2,737.90.

The S&P broke through a trendline dating back to August that connected lows in late August with lows reached in late November. Selling accelerated after this line was broken, and the Dow momentarily dropped below 12,000 for the first time since February 3, though both rebounded.

Options activity suggested that some investors were still cautiously bullish in the long term. Investors have been selling high-flying stocks, but then using long-term call options (which profit if the stock rises).

"There is now a newfound respect for risk, thanks to $100 oil, which has strategists repositioning, potentially raising some cash and using longer expiration options on stocks or indexes to participate on the upside," said Joe Cusick, senior market analyst at online brokerage optionsXpress.

Priceline.com Inc (PCLN.O) jumped 8.5 percent to $462.34 and kept the Nasdaq in positive territory after a number of brokerages raised their price targets on the stock. The online travel agency reported a larger-than-expected profit late Wednesday.

General Motors Co's (GM.N) earnings topped estimates, but the stock slid 4.5 percent to $33.02 on concerns about the pressure from rising oil.

In economic news, new U.S. claims for jobless aid fell last week, hinting at an improvement in the labor market, but declines in new home sales and orders for a range of factory goods in January showed the economy still faced headwinds.

About eight stocks rose for every seven that fell on the New York Stock Exchange while on the Nasdaq, almost eight rose for every five that fell.

(Reporting by Ryan Vlastelica; Additional reporting by Doris Frankel; Editing by Jan Paschal)

Thursday, February 24, 2011...

•   April crude oil prices this morning are trading up +$2.53 a barrel and April gasoline is +7.23 cents per gallon. Crude prices surged to a 2-1/3 year high of $103.41 a barrel in overnight trade on speculation the unrest in Libya has caused it to lose as much as two-thirds of its oil output. Crude oil and gasoline prices yesterday rallied sharply for a second day to 2-1/3 year highs and closed higher on a weak dollar and on concern that violent unrest in Libya may disrupt crude supplies: CLJ11 +$2.68, RBJ11 +12.13.

                Bullish factors included (1) concern that civil unrest in North Africa and the Middle East will spill over into major oil-producing countries in the region, (2) the report from Al Arabiya that operations at Libyan oil ports are suspended and the report from Reuters that said Libya, owner of Africa's biggest oil reserves, declared force majeure on all oil-product exports, (3) the drop in the dollar index to a 2-1/2 week low, which bolsters investment demand fo r commodities, and (4) the prediction from Nomura Holdings that oil prices may surge to $220 a barrel if the spread of civil unrest halts crude production in Libya and Algeria as OPEC spare capacity would be reduced to 2.1 million barrels a day.

                Bearish factors include (1) a report that said Saudi Arabia, the UAE, Kuwait, Angola and Nigeria would be willing to boost their oil production if buyers demand it even if no OPEC emergency meeting is held, and (2) the outlook that weekly US crude oil inventories expanded for a sixth week when the DOE reports weekly inventories on Thu (one day later due to the President's Day holiday on Mon). Expectations for the weekly DOE inventory report are for crude supplies to climb +1.13 million bbl, gasoline stockpiles to gain +850,000 bbl, distillate inventories to fall -1.35 million bbl and the refinery utilization rate to rise +0.5 to 81.7%.

Friday, February 25, 2011...

•   April crude oil prices this morning are trading up +22 cents barrel and April gasoline is +0.54 of a cent per gallon. Crude oil and gasoline prices yesterday rallied sharply for a third day to 2-1/3 year highs on a reduction in Libyan oil output but shed their gains and finished mixed after the IEA said it is ready to release emergency stockpiles if needed: CLJ11 -$0.82, RBJ11 +0.72.

                Bullish factors included (1) the estimation from Goldman Sachs that the civil unrest in Libya has caused it to lose 1 million bbl of its 1.6 million bbl of daily crude output, (2) concern that civil unrest in North Africa and the Middle East will spill over into major oil-producing countries in the region, (3) the fall in the dollar index to a 3-week low, which bolsters investment demand for commodities, and (4) the unexpected decline in weekly gasoline inventories which fell for the first time this year (-2.80 million bbl versus expectations of +850,000 bbl).

                Bearish factors include (1) the statement from the IEA that it will release its emergency stockpiles of crude into the market if needed, (2) Saudi Arabia's pledge to make up for any lost Libyan crude production if the need arises, and (3) the larger-than-expected decline in Jan US new home sales, which indicates that housing may continue to be a drag on the US economy and fuel demand

Crude Oil...
Chaos in Libya is fueling an accelerating up-trend in crude prices. Twiggs Momentum (21-day) rising above its existing band confirms. The target of $110/barrel* has now been reached

* Target calculation: 90 + ( 90 - 70 ) = 110

10 Ways Rising Oil Prices Will Endanger the U.S. Recovery...

Generally, more democracy has a positive effect on the global economy. Freer people have the ability to buy, sell, and innovate as they please. But the political unrest in the Middle East is having a negative effect on the markets thus far. What makes those revolutions different? The Middle East is a major source of the world's oil. Political uncertainty in the region leads to oil supply uncertainty. For that reason the recent events in nations like Egypt and Libya have been worrying investors and businesses: if less oil flows out of the region to the rest of the world, fuel prices will rise.

In fact, we're already seeing oil prices hit highs this week not seen in two-and-a-half years. These increases come after oil prices already began to rise moderately throughout much of 2010, as the global economy strengthened. High fuel costs could dampen global economic growth, since firms and consumers would be forced to spend more on energy. This effect could also thwart the recently strengthening U.S. economy. Here are 10 ways rising oil prices endanger the recovery:

1. Consumer Spending Weakens

The most obvious casualty of rising oil prices is consumer spending. If Americans are forced to pay more for the gasoline they need to get to and from work, the grocery store, and wherever else, then they'll have less money to spend on discretionary items. Without this extra money going to retailers and other firms, the economy won't grow as rapidly. This possibility is of particular concern to the U.S., where around 70% of economic activity is said to result from consumer spending.

2. Hiring Maintains Snail's Pace or Slows Further

As companies have more money to spend due to better sales and more profits, they can hire additional workers. But higher energy costs could soak up some of the money that would have been used to bring on more employees. Since energy has some impact on most firms' costs, the higher oil prices go, the harder hiring will be for firms.

3. Home Buying Demand Remains Very Anemic

"Drastic increases in oil prices can slow the housing market because many consumers are forced to make spending trade-offs," says George Mason University Mercatus Center Scholar and real estate finance professor Anthony Sanders. If Americans are even slower to re-enter the housing market, then its recovery will be even more difficult. Home prices have begun falling again, and more buyers are needed to stabilize the market.

4. European Contagion Spreads

Several nations in the European Union are in a very fragile state as they try to recover from sovereign debt crises. These same nations produce little oil, so shortages and higher prices could thrust them back into recession. Some of these nations also have significant manufacturing sectors, which often incur fuel-driven input costs. If Europe has more problems, its pain could be felt across the Atlantic as well. The U.S. has significant economic ties to the E.U., so when one goes down, the other also struggles.

5. Tourism Takes a Hit

As oil prices rise, so will the cost of traveling. Higher fuel prices translate into higher costs for plane tickets and automobile trips. Consequently, the U.S. will see tourism decline. This would harm a major segment of the U.S. economy. However, some states where the housing bubble was the most severe, like Florida and Nevada, will suffer disproportionally, as their economies depend on tourism. Their very high unemployment rates would then have even more trouble declining.

6. Exports Decline

Exports have been one of the factors helping along the U.S. recovery. From 2009 to 2010, exports grew by $261 billion, or 17%. This increase has helped to boost GDP. As fuel costs rise, however, global trade will suffer. More expensive shipping costs may weaken the demand for U.S. products. The silver lining, however, is that rising fuel costs could make imports less attractive to Americans, boosting domestic sales of U.S. goods.

7. Consumer Sentiment Falls

It's very hard not to notice when the price at the pump increases. As a result, Americans are well aware of rising gas prices. If consumers worry that more expensive gas will result in their disposable income declining, then this will harm how they view their economic situation. If the steady rise in confidence we've seen over the past several months has been noted by firms, then they may hire more aggressively. But if sentiment hiccups, then jobs will continue to grow very slowly.

8. Investors Look Past Stocks to Gold

We have already begun to see the unrest in the Middle East wreaking havoc on stock markets. If oil prices appear to be rising rapidly, then more investor dollars could flee to safety. This would happen both because the market fears a slower recovery and higher inflation. This might be good news for ultra-safe, inflation-protected assets like gold, but it will be very bad news for investment in businesses that could provide higher growth.

9. The Federal Reserve Is Stifled

At some periods throughout the recession, the Federal Reserve was about the only thing holding the economy together. Its aggressive policies have kept credit flowing. It has also made credit very cheap by keeping interest rates extremely low, which helped some businesses survive and encouraged investment. But as oil prices rise, broader inflation could increase as well. Once that begins, the Fed will be forced to allow interest rates to rise, making credit more expensive and the recovery even harder.

10. Deficits Stay High and U.S. Borrowing Costs Rise

As the economy improves, the U.S. government can finally begin cutting its giant deficits. But rising energy prices will make it more difficult for the government to curb its borrowing for two reasons. First, the slower economy will result in lower tax receipts as economic activity is stifled. Second, falling disposable incomes will dash any hopes for raising taxes, as the government won't want to squeeze lower- and middle-class Americans. Higher U.S. borrowing costs could result if investors don't see smaller deficits soon. Forced aggressive austerity would cut economic growth potential.

First, it's important to note that none of these 10 factors are mutually exclusive. Indeed, many are complementary. It's not likely we would see consumer sentiment fall without the residential real estate market taking a hit, for example. That's why prolonged high oil prices are so dangerous -- they could create a domino effect that would poison many different aspects of the U.S. economy.

Of all these factors, a decline in consumer spending is arguably the most significant. As mentioned above, a huge portion of the U.S. economy depends on Americans' willingness to spend. Consequently, spending is intrinsically connected to a number of the factors noted above. The potential harm to spending is hard to overemphasize if oil prices remain elevated or climb further.

"Oil averaged around $80 [per barrel] in 2010. If it were to average $92 in 2011, that would wipe out a fourth of the $120 billion in payroll tax reduction that we got in the tax compromise in December. If oil were to average $103 in 2011, that would wipe out half of the tax break we got."

He went on to say that a $92 average sounds reasonable. On Friday, the Nymex Crude Future priced a barrel of oil above $97.

While all of these possibilities are serious, it's not time to panic just yet. The problem with political uncertainty is that you don't know how things will ultimately turn out. If the democracies that rise in the Middle East continue to export oil much like the regimes they replace did before, then oil prices shouldn't increase more rapidly than they would have simply due additional demand from the global recovery.

If oil prices are only temporarily elevated due to unrest, then the U.S. recovery should escape relatively unscathed. But if the revolutions in the Middle East push oil prices much higher permanently, then the economic recovery would have a significant obstacle in its path.

Monday, February 28, 2011...

•   April crude oil prices this morning are trading up +9 cents a barrel and April gasoline is down -0.86 of a cent per gallon. Crude oil and gasoline prices last Friday finished higher on concern that turmoil that has cut Libya's crude output may spread to other parts of the Middle East: CLJ11 +$0.60, RBJ11 +3.37. Crude oil prices in overnight trade gave up a $2.00 a barrel gain after the WSJ reported that some Libyan oil exports may bave resumed.

                Bullish factors included (1) concern that the unrest in Libya may blow up into a full civil war and knock out the rest of Libya's crude production, which was estimated by Goldman Sachs to be already cut to only 600,000 barrels day from its normal 1.6 million barrels a day, and (2) concern that the political unrest in Libya will spread to other oil-producing countries in the region and reduce global oil supplies further.

                Bearish factors include (1) the stronger dollar, which reduces investment demand for commodities, (2) the la rger-than-expected downward revision to US Q4 GDP, which indicates reduced energy demand and consumption, and (3) the action by NYMEX to raise its margin requirements on crude oil futures for the first time in nearly 2 years, which may prompt speculators to reduce their crude oil positions to balance their margin accounts.

Tuesday, March 1, 2011...

•   April crude oil prices this morning are trading up +46 cents a barrel and April gasoline is +0.81 of a cent per gallon. Crude oil and gasoline prices yesterday fluctuated on either side of unchanged and moved lower late as a pledge by Saudi Arabia to make up for any lost Libyan crude production offset a weaker dollar: CLJ11 -$0.91, RBJ11 -1.59.

                Bearish factors include (1) the statement from the CEO of Saudi Arabian Oil that they are ready to compensate for any shortfall in the global oil supply from the reduction of output in Libya, (2) a report from the WSJ that oil shipments from Libya's rebel-controlled eastern territory may have resumed, and (3) the threat of long liquidation pressures after the CFTC reported that hedge funds and large speculators increased their long crude oil positions in NYMEX futures by 30% in the week ended Feb 22 to 240,572 contracts, a 4-1/2 year high.

                Bullish factors included (1) the slump in the dollar index to a 3-1/2 month low, which boosts investment demand for commodities, and (2) the spread of civil unrest to Oman, which produced 885,600 barrels of oil a day in Jan and raises concern that Middle Eastern oil production may be disrupted further.

Crude Oil...

Nymex WTI crude is testing the psychological barrier of $100/barrel and, with the ongoing turmoil in Libya, is likely to shortly reach its target of $105.

* Target calculation: 85 + ( 85 - 65 ) = 105

Wednesday, March 2, 2011...

•   April crude oil prices this morning are trading up +43 cents a barrel and April gasoline is +1.68 cents per gallon. Crude oil and gasoline prices yesterday moved sharply higher on concern the civil unrest in North Africa and the Middle East was spreading to Iran: CLJ11 +$2.66, RBJ11 +8.71.

                Bullish factors included (1) the fall in the dollar index to a 3-1/2 month low, which boosts investment demand for commodities, (2) concern that the political upheaval in North Africa and the Middle East may spread to Iran, OPEC's second-largest oil producer, after Iranian authorities arrested opposition leaders in an attempt to stop planned protests, and (3) strong global manufacturing growth that may increase fuel demand after Feb US manufacturing activity expanded at its best level in 27 years, while Europe's manufacturing activity in Feb rose to a 10-1/3 year high and Feb Chinese manufacturing activity expanded for the 24th consecutive month.

                Bearish factors include (1) data fro m Bloomberg that shows Nigeria plans to increase its daily crude exports to 2.01 million barrels a day in April, up +9.3% from 1.84 million barrels in March, and (2) the outlook for weekly crude supplies to increase for a seventh straight week when the DOE releases its weekly crude inventory data on Wed. Expectations for the weekly inventory report from the DOE are for crude oil stockpiles to rise +875,000 bbl, gasoline supplies to remain unchanged, distillate inventories to fall -1.3 million bbl and the refinery utilization rate to increase +0.4 to 79.8%.

Thursday, March 3, 2011...

•   April crude oil prices this morning are trading down -56 cents a barrel and April gasoline -2.77 cents per gallon. Crude oil and gasoline prices yesterday rallied sharply for a second day on concern the civil unrest in Libya will spread to other oil producing countries in the region: CLJ11 +$2.60, RBJ11 +4.20. April gasoline rose to a contract high and nearest-futures Mar gasoline soared to a 2-1/2 year high.

                Bullish factors included (1) the decline in the dollar index to a 3-3/4 month low, which boosts investment demand for commodities, (2) concern that the civil unrest that is curbing oil exports from Libya will spread to other oil-producing countries in the region, and (3) the unexpected declines in weekly DOE inventories of crude oil and gasoline (crude -364,000 bbl versus expectations of +875,000 bbl and gasoline -3.59 million bbl versus expectations of no change).

                Bearish factors include (1) the +1.13 million bbl increase in crude oil inventories at Cushing, Ok lahoma, the delivery point for NYMEX WTI crude contracts, to 38.6 million barrels, the highest level since at least 2004 when the DOE began tracking stockpiles at the hub, and (2) the prediction from Petomatrix GmbH that oil markets are showing signs of "demand destruction" as high prices erode consumption.

Friday, March 4, 2011...

•   April crude oil prices this morning are trading up +83 cents a barrel at a 1-week high and April gasoline is +1.09 cents per gallon. Crude oil and gasoline prices yesterday retreated after the Arab League said it may mediate discussions to end the conflict in Libya: CLJ11 -$0.32, RBJ11 -0.53.

                Bearish factors included (1) the actions by Venezuela and the Arab League to send mediators to Libya in an attempt to end the conflict there, and (2) long liquidation pressures after crude prices surged over $16 a barrel in the past 2 weeks (+19%).

                Bullish factors include (1) the slump in the dollar index to a 3-3/4 month low, which boosts investment demand for commodities, and (2) stronger than expected US economic data on weekly jobless claims and Feb ISM non-manufacturing activity, which signals economic growth that may boost fuel demand.

Monday, March 7, 2011...

•   April crude oil prices this morning are trading up +$2.01 a barrel and April gasoline is +3.76 cents per gallon, both at fresh 2-1/2 year highs. Crude oil and gasoline prices last Friday rallied to 2-1/2 year highs on concern unrest in Libya will spread to other North African and Middle Eastern energy producers: CLJ11 +$2.51, RBJ11 +2.02.

                Bullish factors included (1) concerns the unrest in Libya may spread to other oil producing nations in the region and curb global oil supplies further, (2) the slump in the dollar index to a 4-month low, which boosts investment demand for commodities, and (3) signs that US economic growth is accelerating which may boost energy demand after the Feb US unemployment rate unexpectedly declined to its lowest level in 1-3/4 years and Jan US factory orders posted their biggest increase in 4-1/4 years.

                Bearish factors include (1) the decline in the stock market which erodes confidence in the economic outlook and energy demand, and (2) the ac tion by the CME to raise margins on NYMEX crude and petroleum contracts, which may reduce speculation and prompt long liquidation as traders raise funds to cover margins.