Libyan export disruptions, US data send oil prices soaring

Oil prices rose nearly $1 on Friday following news of a major unit shutdown at an East Coast Canadian refinery. Brent and US crude found early support from positive US manufacturing data and disruptions to Libyan exports. A short flurry in activity saw volume spike and crude prices jump 80 cents between 10:35 a.m. EDT (1435 GMT) and 10:37 a.m., Reuters reported.
Market watchers tied the sudden move to weakness in the dollar after the US Commerce Department reported a bigger-than-expected decline in US new home sales to the lowest level in nine months.
Brent crude traded up $1.08 to $110.98 a barrel by 11:49 a.m. EDT, off earlier highs of $111.23 a barrel.
US crude rose $1.16 to $106.19 a barrel, off a session peak of $106.94.
John Sfakianakis, chief investment strategist at Masic in Saudi Arabia, told Arab News: “Oil prices will continue to demonstrate resilience on the back of positive economic news in the US, Asia as well as Europe. The latest China PMI number shows good growth traction and that is giving a good boost to oil prices.”
He added: “Geopolitics plays a define role in helping both Brent and WTI stay above $100 per barrel.”
Sfakianakis said: “Saudi Arabia continues to play its stabilizing role as the world's supplier as per demand needs.”
Gasoline prices shot up after energy intelligence provider Genscape reported the shutdown of a 70,000 barrel per day (bpd) fluid catalytic cracking unit at Irving Oil's 300,000 bpd St. John refinery in New Brunswick, Canada. The unit will be down for about a week, trade sources said.
September US gasoline futures traded up 4 cents to $3.0048 a gallon. The premium of the September contract to the October contracts, which blew out to 14.08 cents from 12.64 cents on Thursday right after the first reports of the Irving refinery outage, traded down to 13.09 cents.
Experts say there are signs — including falling unemployment claims and rising manufacturing — that demand for oil in the world's largest economy is gaining momentum. At the same time, the US Federal Reserve is expected to begin phasing out its monetary stimulus measures, which have led to lower interest rates in an effort to boost economic growth. The measures have also motivated investment in oil and other commodities, according to the Associated Press.
"Over the last couple of days, more and more signals have emerged that point to an improving economic situation in the US," said a report from JBC Energy in Vienna. "Although a reduction of the bond purchasing program would lower the interest in risky assets, we see it as a positive development reflecting the fundamental improvement of the US economic situation, which eventually would also be felt in oil demand."
Risk premiums linked to the political crisis in Egypt and labor conflicts at key Libyan ports used to ship oil exports have also supported crude prices over the past days.
Egypt controls the Suez Canal and the Sumed pipeline, crucial transport routes between the Middle East and the Mediterranean Sea through which around 4.5 million barrels of oil and refined products are shipped daily.