Oil hits highs as Libya turmoil deepens

HONG KONG: Crude oil prices rose to 2-1/2 year highs on Monday on heightened concerns about supply disruptions because of the deepening unrest in Libya, while Asian shares slipped as a concern in the Middle East and the rise in weighed on energy stocks.
Asian markets see-sawed following fluctuations in oil prices in recent weeks, but the MSCI index except Japan. MIAP00000PUS almost 2-1/2 percent from the peak year of testing in January, indicating that the markets were largely resistant to the Libyan crisis.
Nevertheless, investors are worried that the prolonged period of high oil prices could stifle economic growth and undermine corporate profits, and adding to inflationary pressures in countries with developing economies.
On Monday, the MSCI index excluding Japan fell more than a half percent.
U.S. Crude oil futures jumped 1.6 percent, surpassing $ 106 for the highest price in 2-1/2 years on Monday as a counter-offensive Moammar Gadhafi, Libya against the rebels deepened fears that civil war is brewing in Africa's largest holder of oil reserves.
ICE Brent Crude was trading in April at $ 117.28 per barrel, or 1.1 percent.
"We are talking about that with the fact that we see in Libya, this is purely fear driving the market," said Jonathan Barratt, managing director of commercial brokerage services in Sydney.
"Every time the price goes up a bit, people are forced into the market. As soon as she feeds herself, she will continue to grow," Barratt said, adding that $ 120 may be the peak without any further supply disruptions.
Strong enough package of U.S. data on Friday that showed the unemployment rate to fall over the next two-year low could raise the mood, as investors remain firmly focused on events in the Middle East and as a result of longer-term impact on oil prices.
U.S. crude up more than a fifth in the last two weeks.
Surge in oil combined with rising food prices present new challenges for central banks in Thailand, Malaysia, South Korea and New Zealand, who lead policy meetings this week.
Region a major importer of oil and market participants fear that the sharp rise in prices will curb growth and fuel inflation pressures.-Reuters