After a volatile week, oil futures settled at US$103 on the Nymex, while Brent futures rose to US$115. Oil price volatility is supported on concerns as the unrest in the Middle East and North Africa continues to extend and uncertainty shrouds demand from Japan, the world's third-largest oil consumer. Beginning of the week witnessed a fall in oil prices by the knee jerk reaction to Japan's strongest earthquake and investor pessimism about the country's growth prospects. Prices got a boost from the later half of the week as markets grasped that Japan’s loss of nuclear power will generate a demand for hydrocarbons.
Tensions mount in West Asia - Anti-aircraft fire rang out across Tripoli. "It now seems likely that there will be a significant loss of Libyan oil supplies for some time," said Ric Spooner, chief market analyst at CMC Markets. "This will reduce the buffer of excess capacity and increase the oil market's vulnerability to any new supply shocks which may emerge. This may see a risk premium being maintained in the oil price for some time."