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Oil Nears $102 on Libya Supply Disruption

Stocks in this article: TOT

SINGAPORE -- Oil prices zoomed to nearly $102 a barrel Thursday in Asia as chaos in Libya disrupted crude supplies from the OPEC nation, and traders worried instability could spread to oil-rich countries in the Middle East.

Benchmark crude for April delivery was up $3.55 at $101.65 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract, which has soared about 20% since last week, jumped $2.68 to settle at $98.10 on Wednesday.

In London, Brent crude for April delivery vaulted $5.74 to $116.99 a barrel on the ICE Futures exchange.

Libyan leader Moammar Gadhafi's grip on power slipped further as rebels took control of much of the eastern part of the country and advanced around Tripoli, the capital. Two air force pilots parachuted out of their warplane and let it crash into the eastern Libyan desert rather than follow orders to bomb an opposition-held city.

The mayhem has disrupted crude exports from Libya, which produces about 1.6 million barrels of crude per day and has the biggest oil reserves in Africa.

French oil giant Total (TOT) said it started to wind down its operations, which average of 55,000 barrels per day last year. Libya's biggest oil producer, Italy's Eni, idled operations that produce 244,000 barrels of oil and gas per day. Spain's Repsol-YPF and Austrian oil company OMV also suspended operations. Germany's Wintershall said it shut down operations that produced up to 100,000 barrels of oil per day.

Evacuations of oil company employees and their families continue.

"It's becoming apparent that a large block of the country's output will be curtailed as various international oil companies evacuate staff from the country," Ritterbusch and Associates said in a report. "The futures market may be forced to price in a major loss of Libya's output for at least a few weeks."

"Continued instability in the Middle East and North Africa will likely keep this bull move alive into the spring," Ritterbusch said. "This still feels like a market that is far from achieving a top."

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