Oil traded near the highest in more than two years in London as civil unrest spread in the Middle Eastern, renewing concern crude shipments will be disrupted. Brent futures rose as much as 0.5 percent as pro-democracy demonstrations stretched into a third day in Bahrain, while protesters clashed with police in Yemen and Libya, the eighth- biggest oil producer in the Organization of Petroleum Exporting Countries. Prices were also supported by signs of economic expansion in the U.S., the largest oil user. “Places like Bahrain are next to Saudi Arabia and that is the real problem if anything happens there,” said Anthony Nunan, assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “The economic numbers are looking OK in the U.S. That’s supportive for the oil market.” Brent crude for April settlement advanced as much as 52 cents to $104.30 a barrel and was at $103.89 a barrel at 8:44 a.m. on the ICE Futures Europe exchange in London. The contract rose yesterday by $2.14 to $103.78, the highest close since Sept. 25, 2008. Crude for March delivery on the New York Mercantile Exchange was down 31 cents at $84.68 a barrel after gaining as much as 31 cents to $85.30 a barrel. Prices rose 0.8 percent yesterday to $84.99, the highest since Feb. 11. Oil in New York is up 9.5 percent from a year ago. The difference between the April contracts in London and New York was at $16.20 a barrel, compared with $15.94 yesterday. The March West Texas Intermediate contract in New York expires on Feb. 22. Middle East Oil-market risk is “high and rising” amid unrest in the Arab world, JPMorgan Chase & Co. said in a report. Crude gained 0.8 percent yesterday after Israeli Foreign Minister Avigdor Lieberman said two Iranian gunboats are planning to move through the Suez Canal. Countries in the Middle East and North Africa were responsible for 36 percent of global oil production and held 61 percent of proved reserves in 2009, according to BP Plc, which publishes its BP Statistical Review of World Energy each June. The Associated Press reported the first protests against Libyan leader Muammar Qaddafi, who has held power since leading a military coup in 1969. “Political tensions in the Middle East continued to intensify, adding to crude supply disruption concerns,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today. Libya pumped 1.59 million barrels of crude a day in January, making it the eighth-biggest oil producer among those with quotas in OPEC, Bloomberg News estimates show. Fed Outlook U.S. Federal Reserve officials “continued to express disappointment in both the pace and the unevenness of the improvements in labor markets,” while also judging the recovery to be on a “firmer footing,” the Federal Open Market Committee said in minutes of its Jan. 25-26 meeting, released yesterday in Washington. Policy makers raised projections for economic growth this year and made little change to forecasts after 2011 or for unemployment and inflation. The jobless rate will average 8.8 percent to 9 percent in the fourth quarter, Fed officials projected, down from November forecasts of 8.9 percent to 9.1 percent. U.S. crude stockpiles increased by 860,000 barrels to 345.9 million last week, an Energy Department report showed yesterday. A 2 million-barrel gain was forecast, according to the median of 13 analyst responses in a Bloomberg News survey. Gasoline supplies rose 205,000 barrels to 241.1 million, the highest level since March 1990. Analysts projected a 1.85 million-barrel increase. To contact the reporters on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net

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