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Mon 29 Dec 2014 12:05 PM

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Oil prices climb on Libya supply worries

Brent climbs towards $60; US crude rises above $55

Oil prices climb on Libya supply worries
(Getty Images)

Oil prices rose on Monday, after dropping for the past two sessions, as escalating clashes in Libya stoked worries about supply from the OPEC member.

A fire caused by fighting at one of Libya's main export terminals has destroyed 800,000 barrels of crude - more than two days of the country's output, officials said, amid clashes between factions battling for control of the nation.

"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.

Brent crude was up 48 cents at $59.93 by 0530 GMT after hitting $60.40 in earlier in the day. The benchmark settled down 79 cents in the previous session.

U.S. crude rose 69 cents to $55.42 after closing $1.11 down in thin trade on Friday. It rose to a peak of $55.74 in early trade on Monday.

Daniel Ang, an analyst with Singapore's Phillip Futures, expects Brent to stay around $60 and U.S. crude to trade between $55 and $56 this week.

Oil prices also drew support from short covering by traders and plans by China and Japan to boost liquidity.

The People's Bank of China plans to loosen loan-to-deposit ratios for banks from next year. China's economy is expected to grow by 7 percent in 2015, slower than the forecast 7.3 percent in 2014, a government think-tank, the State Information Centre said on Monday.

Japan's government approved on Saturday stimulus spending worth $29 billion to help the country's lagging regions and households with subsidies, merchandise vouchers and other steps, which it hopes will boost GDP by 0.7 percent.

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