Oil rises above $105 per barrel

The price of oil rose above $105 per barrel Tuesday as traders tried to predict how a series of international crises will drive world supply and demand this year. May light sweet crude traded as high as $105.18 US per barrel on the New York Mercantile Exchange before giving back some of that to close up $1.88 at $104.97 US.

Energy economists continued to try to gauge how recent unrest in Libya, Bahrain, Yemen and Syria will affect oil production.

Libya, which produces enough oil to meet nearly two per cent of world demand, has almost totally stopped shipping it as rebels battle pro-Gadhafi forces.

The addition of international forces, including the U.S., could mean that the country will be embroiled in a protracted conflict that will keep oil fields offline much longer than previously expected, energy experts said.

Iraq's new oil minister said Tuesday that he expects oil to reach $120 a barrel. Iraq produces about 2.4 million barrels of oil per day.

In Calgary, a petroleum expert predicted little relief from high gasoline prices, so long as unrest continues to simmer in Libya. Roger McKnight of En-Pro International said fears that unrest could spread to bigger crude producers in the Middle East will keep driving world oil prices higher.

The Canadian average for gasoline has been hovering just under $1.22 per litre — around 20 per cent higher than it was a year ago at this time.

Goldman Sachs has estimated that speculation about the spread of political unrest in North Africa and the Middle East has added about $10 US to the price of oil since mid-February.

Adding to the complexity of predicting where energy prices are headed is Japan, which continued to stabilize the Fukushima Daiichi nuclear complex that was damaged and leaking radiation following this month's earthquake and tsunami.

Bank of America analyst Sabine Schels said the country will lean on other power generators that run on liquefied natural gas and oil to make up for the loss of its nuclear facilities.

Schels estimated that Japan will increase imports of liquefied natural gas between 706 million and 848 million cubic feet per day to partially replace power lost from damaged nuclear reactors.

Japan's increased imports are expected to push world natural gas prices higher, though large global supplies should prevent them from spiking above $13 US per 1,000 cubic feet as they did in 2008.