Oil prices close at 2-1/2 year peak

An Iraqi laborer works at an oil refinery in the southern town Nasiriyah on October 30, 2015. AFP FILE

NEW YORK, United States — Oil prices in New York jumped to a two-and-a-half year high Tuesday and briefly topped $60 a barrel due to a Libyan pipeline explosion and frigid weather in the US.

The benchmark US contract, West Texas Intermediate for February delivery, rose $1.50 to $59.97 a barrel after earlier breaching $60 for the first time since June 2015.

Brent North Sea crude for February delivery advanced $1.77 to $67.02 a barrel, a level not seen since mid-2015.

Phil Flynn, of the Price Futures Group in Chicago, said while there were several factors behind the price jump, “the headline today is Libya, which is raising concern about the oil supply.”

The blast occurred on a pipeline to the Al-Sidra export terminal and was expected to curtail Libyan oil output by 70,000 to 100,000 barrels a day, the National Oil Company said .

‏”NOC continues to investigate the causes of the explosion” north of the town of Marada, according to the statement.

The Libyan outage adds to worries about European supply following a weeks-long disruption to the Forties pipeline in the North Sea after a crack was found in the line.

In addition, Flynn said cold weather in the US would lift demand for heating oil and natural gas, pressuring supply. Temperatures in New York City are expected to approach the single digits Fahrenheit in the coming days, while Chicago could fall below zero.

The price increase also follows a move by the Organization of the Petroleum Exporting Countries to extend its agreement on production limits through 2018.

Saudi Arabian officials are forecasting their first budget surplus in a decade amid expectations of higher oil prices, Bloomberg News reported, citing unnamed sources. /cbb