PARIS — Oil prices continued to rally Thursday, pushing stocks lower in Europe and Asia amid fears that the unrest in Libya could spread to other major Middle East producers. The benchmark light, sweet crude futures contract touched the key $100 a barrel level in New York on Wednesday for the first time since September 2008. On Thursday, the April contract was at $100.95, up $2.85, in pre-market trading.
In London, the April Brent crude futures contract was at $115.10 a barrel, up $3.80, at midday. Earlier it had risen to $119.79, the highest since mid-2008.
The spreading of unrest from Egypt to Libya in recent weeks has sharply magnified the potential shortfall for global markets — and especially Europe given that Egypt produces 500,000 barrels of oil a day against 1.5 million or so in Libya, where producers have been winding down production.
Paolo Scaroni the chief executive of Italian oil giant ENI, was quoted by Reuters as saying that the turmoil in Libya had cut the country’s oil output by 75 percent, or 1.2 million barrels a day.
The main focus in the markets Thursday was again on the world’s top exporter, Saudi Arabia. Analysts said the oil price rise was checked after news reports cited unnamed Saudi officials as saying the country was willing and able to supply oil to replace Libya’s disrupted supply if needed.
Saudi rulers are also responding to the regional unrest with money and have offered $36 billion in social support to quell rumblings of dissent, according to reports.
In London the FTSE 100 was down 0.5 percent around midday, while the DAX shed 1 percent in Frankfurt. Most Asian markets, aside from mainland China, closed lower Thursday.
The Match S&P 500 U.S. stock futures pointed to a 0.5 percent decline at the open on Wall Street. The figure was well off the lows, however, reflecting a paring of oil’s sharp early advance.
Stephen J. Lewis, head of research at Monument Securities in London, said the risk of a broader sell off across asset classes still appeared limited as long as the U.S. Federal Reserve continues to pump huge amounts of liquidity into the financial markets through its quantitative easing program.
“’Underlying all this, the state of liquidity will remain strong as long as the Fed keeps buying assets,” he said. “I’d say there is still a fairly positive backdrop for risk markets until till June.”
Analysts at Deutsche Bank said in a research note that for there to be a lasting impact on the recovery from the spike in crude, “there may have to be serious disruption to Saudi oil supplies” or another reason why light, sweet crude prices climb above $120 barrel. This, they said, “will be an inflection point for global growth.”
Gauging the impact on inflation and prices that Western consumers will pay at the pump is difficult and depends on the actions of oil companies and governments. The major oil companies could choose to limit price increases and temporarily accept lower margins to keep prices from rising too high. Some oil companies will have hedged against rises in futures prices, which would also allow them to limit retail rises.
Also, advances in refining techniques in recent years allow companies to produce more of the lighter oil used by consumers — like gasoline and diesel — from heavy, unrefined oil than was the case even five years ago.
U.S. consumers are likely to feel the price increase at the pump more quickly and directly than their European counterparts, given the fact that in Europe, a much higher percent of the price at the pump is in fact tax — about 80 percent in some countries.
In a research report released Wednesday, analysts at Barclays Capital in London, said that they remained bullish on the long-term oil price regardless of the political situation in the Middle East because “field decline and constrained access to new exploration acreage mean new supply will struggle to keep pace with demand growth.”
There is still spare production capacity among producers, according to the report written by analysts including Tim Whittaker, but that has been falling from a peak in 2009 as demand growth heads upward, led by emerging markets.
The Barclays report forecast global demand would increase by 2 percent this year, led by further strong growth in China and other emerging markets.
“We expect oil prices to follow an upward trend until the middle of the current decade, with lower spare capacity over tim
city over time resulting in a greater sensitivity to geopolitical trends,” the report said.
