Continued strife in Libya set the stage for continued increases in the prices of both oil and gold, with the potential for oil scarcity in the U.S. rearing its head.
On Friday gold neared $1,420 per ounce, riding the seesaw higher in the wake of Wednesday prices of $1,440 on Libyan turmoil and Thursday’s fall on news that the European Central Bank (ECB) could raise interest rates as early as April. Brent crude topped $115 per barrel on news that Libyan rebels were on the move toward a major oil terminal and that protests were taking place in Saudi Arabia’s oil-rich Eastern Province. U.S. crude rose as well, with April futures topping $103 per barrel before dropping back a bit to $102.55 per barrel.
Reuters reported that the situation in the Middle East/North Africa (MENA) could lead to tighter supplies in the U.S. if Libyan disruptions continue over a longer term. Normally the U.S. buys oil from Algeria, and Libyan oil goes to markets in Europe. But with continued scarcity of Libyan oil, Europe will be competing for Algerian crude, which will drive up the price or lower supplies in the U.S.
The Energy Information Administration (EIA) said, in its weekly oil market review, "Unlike Libyan production, more than a third of Algeria's light, sweet crude [a possible substitute from fields relatively close to Libya's] is shipped to U.S. refiners, which sometimes use it as a blending stock to lighten heavier crude grades."