Singapore: US crude rose more than $1 in early Asian trade on Monday, reversing a fall in the previous session as escalating clashes in Libya threatened oil exports and supply disruptions from the OPEC member.
Both US crude and Brent climbed on renewed geopolitical concerns and the possibility of increased demand for oil on new fiscal stimulus packages by China and Japan.
Forces loyal to Libya`s recognised government launched air strikes on the western city of Misrata on Sunday in apparent retaliation against a missile attack last week which started a fire at Es Sider, one of the OPEC producer`s largest export terminals.
More than 800,000 barrels of crude - at least two days production - was destroyed by the fire which continued to engulf three storage tanks, the National Oil Corporation said on Sunday. Libya`s total oil production stands at 385,000 barrels per day, it added..
"Libya, and all the other problems, warrants some kind of risk premium," said Jonathan Barratt, chief investment officer at Sydney`s Ayers Alliance.
"Oil is at a level where people are happy to build in a risk premium," he said.
Investors were also optimistic that plans by China and Japan to boost liquidity would see demand for oil pick-up, Barratt added.
US crude briefly touched $55.74, up $1.01, after closing $1.11 down in thin trade on Friday. It was at $55.35 a barrel as of 0048 GMT.
Brent crude climbed 95 cents to hit $60.40 before falling back to $59.84 in early Asian trade on Monday. The benchmark settled down 79 cents in the previous session.
