By early afternoon in Europe, benchmark crude for March delivery was up $3.10 to $89.30 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 16 cents to settle at $86.20 on Friday.
U.S. markets, including Nymex floor trading, were closed Monday for the Presidents’ Day holiday.
In London, Brent crude for April delivery gained $1.73 to $104.25 a barrel on the ICE Futures exchange.
The spread between the Nymex and Brent contracts has narrowed slightly but still remains far above usual levels of a few dollars per barrel. Brent is considered to be more sensitive to possible disruptions of Middle East oil supplies, while large U.S. stockpiles of crude are one of the reasons for the lower Nymex quotes.
On Sunday, Seif al-Islam Gadhafi, son of Libyan leader Moammar Gadhafi, warned protesters that they risked igniting a civil war in which Libya’s oil wealth “will be burned.” Libya exports at least 1 million barrels of crude a day.
“Compared to Tunisia (a minor crude exporter) or Egypt (not an exporter but a transit country), instability in Libya is a major concern to the oil industry,” said analysts at JBC Energy in Vienna.
Earlier Sunday, anti-government demonstrations spread to the Libyan capital of Tripoli and protesters seized military bases and weapons. In the eastern city of Benghazi, about 60 people were killed, while more than 200 have died since the unrest began seven days ago.
Oil traders are also closely watching recent protests in Iran, which is the second-largest crude exporter in the Organization of Petroleum Exporting Countries behind Saudi Arabia.
“The concerns in the market go beyond Libya,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. “It’s unlikely we’re going to see any meaningful disruption of oil from the Middle East or North Africa, but the spread of this unrest has raised anxieties.”
Some analysts are worried higher oil prices will undermine a fragile economic recovery in developed countries. For every $1 increase in the price of a gallon of gasoline, U.S. consumer spending falls by about $120 billion, said Gerard Minack, an economist with Morgan Stanley.
“Energy is more important for developed-world consumers than food,” Minack said. “This is why further sharp rises in oil prices, if they occur, would be likely to be seen as a threat to growth.”
In other Nymex trading in March contracts, heating oil rose 5.22 cents to $2.7651 a gallon and gasoline gained 3.83 cents to $2.5896 a gallon. Natural gas futures lost 0.9 cent to $3.867 per 1,000 cubic feet.