Oil price up after attack on US consulate in Libya

Oil traded above $97 a barrel Thursday after attacks on U.S. diplomatic missions and the killing of the U.S. ambassador to Libya sparked new worries about unrest in the Middle East.

By early afternoon in Europe, benchmark crude was up 25 cents at $97.26 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 16 cents Wednesday to end at $97.01 per barrel in New York.

In London, Brent crude was down 8 cents at $115.25 a barrel on the ICE Futures exchange.

Ambassador Chris Stevens and three other Americans died after an attack on the U.S. diplomatic facility in Benghazi on Tuesday. The attack in Libya came hours after a mob stormed the U.S. Embassy in Cairo and tore down the U.S. flag. On Thursday, protesters stormed the American embassy in Yemen.

Analysts said the while impact of the attacks on oil prices had been subdued thus far, risks were on the rise.

"The fact that all of this is occurring without a price impact on oil shows that a geopolitical premium is already priced in," said Olivier Jakob of Petromatrix in Switzerland. "We need however to keep in mind that due to the sanctions on Iran there is absolutely no room for another disruption in any oil producing country."

Oil analyst Stephen Schork said in an email commentary that he expects "the fundamental picture to be overtaken by the powder keg that was ignited yesterday in Libya ... we will be keeping a close eye on tension in the region."

Traders were also awaiting the end of a two-day Federal Reserve policy meeting at which central bankers were widely expected to announce new steps to help the flagging U.S. economy.

Should the Fed fail to announce the awaited measures, "we may see crude prices unwind some of their recent gains as the dollar corrects higher," said a report from Sucden Financial Research in London. A stronger dollar makes crude more expensive and a less attractive investment for traders using other currencies. Early Thursday, the euro was up to $1.2911 from $1.2900 late Wednesday in New York.

In other trading on the Nymex, heating oil fell 0.65 cents to $3.2217 per gallon. Wholesale gasoline dropped 0.76 cent to $2.994 per gallon. Natural gas lost 2 cents to $3.043 per 1,000 cubic feet.

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Pamela Sampson in Bangkok contributed to this report.

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2012-09-13-Oil%20Prices/id-d2dc54e6987d4341a54972956b777dbf

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