Energy traders in Europe are reacting to the outbreak of violence surrounding Libya’s political protests with concern. Unlike Egypt or Tunisia, this is a major OPEC oil producer.
West Texas crude (WTI, quote) is up 4% in European trading this morning and the European benchmark Brent contract (Brent, quote) is up about 1.5% at over $104.
Naturally, all this action should push oil investments like USO (quote) upward in sympathy once U.S. trading reopens tomorrow.
If this uprising spreads to Algeria and Iran, OPEC starts to have big problems.
Iran moves two warships through the Suez Canal on Tuesday and there are even signs that the eastern Saudi oil fields in Bahrain are exposed to unrest there.
The upside is that North American oil inventories in particular are well supplied right now and there is still spare capacity of 4.5 million barrels a day or so in Saudi Arabia.
The real trades are gold — GLD (quote) — due to the global safe haven bid emerging here, and in the long term possibly natural gas, as embodied by funds like UNG (quote).