Oil hits 30-month high as US growth boosts demand
Ongoing conflict in Libya, Africa's third-largest producer, curtailing supply
OIL climbed to the highest level in 30 months yesterday on speculation that US economic growth may boost demand and a protracted conflict in Libya will curtail supply.
Commodities rose to at least two-year highs for the same reasons with silver jumping to a 31-year high and wheat rallied. Oil hit $108.78 a barrel in New York. Copper advanced 0.7pc, lead jumped as much as 5.1pc to the highest since April 2008 and corn rose to a two-year high.
Cocoa rallied 1pc as the fight for control of the commercial capital of Ivory Coast, the world's largest producer, entered a fifth day.
Every $10 rise in the price of a barrel of oil cuts Irish growth by 0.25pc, the Department of Finance said yesterday.
Brent crude futures prices rose more than $1 to a two-and- a-half-year peak of more than $120 a barrel yesterday, closing in on the $120 level. That left Brent prices at their highest since before the Lehman Brothers collapse and the global financial crisis in September 2008.
Oil futures advanced for a a third straight day after a report last week showed the US added more jobs than economists forecast last month.
Prices are too high and "worrying", the chief executive officer of Kuwait Petroleum said yesterday. Forces loyal to Libyan leader Col Muammar Gaddafi bombed an oil field south of the city of Ajdabiya yesterday heightening concern output losses from Africa's third-largest producer may continue.
"It's becoming increasingly clear that the situation in Libya may be prolonged," said Christopher Bellew, senior broker at Bache Commodities in London.
"The more one looks at uprisings in the Middle East, the more one realises they will not be easy to resolve. At the same time, oil demand is relatively inelastic to higher prices."
Oil prices in New York have climbed 28pc since anti-government protests began on February 15 in Libya, cutting the nation's output by two-thirds. The conflict is the bloodiest in uprisings that have toppled the presidents of Tunisia and Egypt and spread to Bahrain, Iran, Yemen and Oman.
"Upcoming elections in Nigeria amid the intensified unrest" in the Middle East and North Africa region may add to concern over oil supplies, Mark Pervan, head of commodity research at Australia and New Zealand Banking, said.
Nigeria, Africa's biggest oil producer, will hold general elections a week later than planned, the Independent National Electoral Commission said, after a vote to elect deputies ended in chaos on Friday last.
Parliamentary elections, which had been rescheduled, will take place on April 9, while the presidential vote is set for April 16, Attahiru Jega, head of the electoral commission, said.