Brent Prices Lifted By Libyan Kidnapping
Geopolitical tension pushed Brent crude oil prices towards $110 after news that Libya's Prime Minister was kidnapped. The commodity traded at $109.86 as concern about new supply interruptions from Libya supported prices.
Reuters reported that armed men broke in to Libyan Prime Minister Ali Zeidan's hotel room in Tripoli and took him to an unknown location.
The kidnapping comes following a series of labor strikes which cut Libya's oil output to less than half of its normal capacity. After weeks of closures, the nation's largest oil fields reopened and its output returned to 700,000 barrels per day. However, the government's army and police force have struggled to deal with outbreaks of violence.
Moving forward investors will be watching for more details about the kidnapping for clues about whether or not the incident could lead to more supply disruptions from the North African nation. Although it has put a floor under Brent prices, most don't expect to see a huge jump as the situation will likely have no effect on the country's oil exports.
On Wednesday, crude prices sunk after data from the US showed the nation's stockpiles had risen by 6.8 million barrels last week. The figure far outweighed analyst predictions of a 1.5 million barrel increase.
The budget showdown in Washington is largely to blame for oil's gloomy demand outlook. Democrats and Republicans remain deadlocked over the nation's borrowing limit, however many are holding out hope for President Barack Obama's White House meetings with Republican lawmakers, scheduled for Thursday.
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