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Oil hits record levels over unrest in Libya

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On the New York Mercantile Exchange, oil price hit a two year high, nearing 107 dollars a barrel. This is, of course, an ongoing story over the past few weeks, markets around the globe have been shaken by the unrest in Libya and its effect on oil prices.

A prolonged cut in crude exports from the OPEC nations could hurt the worldwide economic recovery by raising transportation and manufacturing costs. Benchmark West Texas Intermediate crude oil rose 78 cents to 105 dollars per barrel. It's unclear how long Libya's oil exports will be cut off, and traders are preparing for a worst-case scenario in which world oil supplies would be under pressure for months.

John Woods, President of JJ Woods Associates & Floor at NYMEX said "We are reacting on rumors, we’re reacting on what is happening in Libya. This is a total overreaction on a lot of people's parts, let's see exactly where this is taking us but unfortunately you are seeing this market just scream out of the gate."

OPEC has ramped up production to make up for the loss of Libyan crude. It is reportedly that Saudi Arabia, Kuwait, the United Arab Emirates, and Nigeria are planning to put another 1 million barrels per day on the market. Also, the Obama administration is evaluating whether to tap into U.S. strategic oil reserves to slow the rising price. Libya sits on the largest oil reserves in Africa. Officials there say the oil fields continue to operate, but daily exports of 1.5 million barrels could be cut off for some time.


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