Beyond Libya: Four factors affecting oil prices
Oil prices changed little despite high trading volume on Friday, as oil traders eyed developments in four nations: Libya, Yemen, China, and Japan.
Oil markets churned on Friday as traders tried to figure out how oil's price would be affected by four different international events: the situation in Libya, violence flaring up in Yemen, the continuing nuclear drama in Japan, and the Chinese government's decision to raise interest rates.Skip to next paragraph
Subscribe Today to the Monitor
With so much uncertainty, many traders decided to lighten their positions going into the weekend – but others decided that oil prices will rise, so increased their position. The result was high volume with little price movement. By 1 p.m., the price of oil was very slightly down at $100.69 per barrel on the New York Mercantile Exchange in New York.
Oil prices have stayed around $100 per barrel for the past two weeks, reaching a high of $105.44 on March 7. International developments appear to have stalled oil's rising prices as market analysts try to decipher the impact of recent events.
Many traders kept their eyes on the shifts taking place in Libya. Shortly after the UN authorized military action against Col. Muammar Qaddafi, the Libyan foreign minister declared a unilateral cease-fire.
“It reminds me of Saddam Hussein (former leader of Iraq), who knew how to game the UN diplomatic corps,” says John Kilduff, an energy analyst and founder of Again Capital, a New York-based hedge fund that focuses on energy. “It will maintain the uncertainty.”
SOUND OFF: Did the UN make the right decision?
No matter what happens in Libya over the short term, Mr. Flynn expects Libyan oil will remain off the markets. “To me, if Qaddafi does miraculously stay in power, the world will hit him with sanctions and no one will be able to buy their oil.”
Before the uprising, Libya was pumping about 1.65 million barrels of oil – mostly light crude – each day, most of it going to European nations where it was made into low-sulfur diesel and gasoline.