Oil jumps $2 as Libya crisis escalates

By Catherine Tymkiw, markets editor


NEW YORK (CNNMoney) -- Oil prices jumped more than $2 a barrel in electronic trading Sunday following escalating violence in Libya, where the military called for an immediate cease-fire after allied forces fired on Libyan defense sites.

"It seems like things have stepped up and that means more uncertainty," said Peter Beutel, an oil analyst with Cameron Hanover. "Every incident that you have expands [uncertainty]."

The benchmark U.S. contract, West Texas Intermediate, for April delivery gained $1.95 to $103.02 a barrel. The more active May contract jumped $2.08 to $103.93 a barrel.

That's still comfortably below the $106.95-a-barrel high hit two weeks ago, but Beutel said he expects volatility to rule the day.

"[Volatility] just possibly couldn't get any higher," he said, adding that he wouldn't be surprised to see prices go up by $50 and then drop $100 over the course of the year. "Volatility is getting worse and worse each day."

Meanwhile, brent crude, the main European contract, rose $1.05 to $114.98 a barrel.

While Libya is Africa's third-largest oil producer and sits atop the continent's largest reserves, the country only contributes about 2% of the 87.5 million barrels of oil the world consumes every day.

Earlier this month, the International Energy Agency estimated roughly 1 million barrels per day of Libyan oil had been taken off the world market so far.

Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries have pledged to increase production to make up for any lost oil due to unrest in Libya.

But concerns are less about Libyan production and more about how far the problems will spread.

Traders are worried about growing conflict in the Middle East, following protests in Yemen, Bahrain and Oman.

"It's spreading closer and closer to the Petroleum Gulf," said Beutel, and that's what's fraying investors' nerves.

So far this month, oil prices are averaging just over $101 a barrel. In March 2010, prices averaged just over $81 a barrel for the entire month. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.30%4.43%
15 yr fixed3.30%3.27%
5/1 ARM3.34%3.46%
30 yr refi4.27%4.39%
15 yr refi3.27%3.25%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,083.80 -2.83 -0.02%
Nasdaq 4,472.11 -1.59 -0.04%
S&P 500 1,987.98 0.97 0.05%
Treasuries 2.51 0.04 1.83%
Data as of 1:18am ET
Company Price Change % Change
Facebook Inc 74.98 3.69 5.18%
Ford Motor Co 17.84 0.06 0.34%
Yahoo! Inc 36.17 1.46 4.21%
Bank of America Corp... 15.62 0.10 0.64%
Apple Inc 97.03 -0.16 -0.16%
Data as of Jul 24

Sections

Would you pay $7.76 for a Big Mac? The Economist's iconic Big Mac index is a lighthearted way to compare currencies and buying power around the world. More

The government says health insurers are charging lower premiums, thanks to a provision in Obamacare. More

In New York City, business travelers have ditched meals at Starbucks in favor of Seamless takeout, according to a new report. More

CNNMoney readers rip managers who micromanage to death, play favorites, throw their staff under the bus and steal credit for their work. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.