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updated 3/4/2011 3:45:46 PM ET 2011-03-04T20:45:46

Oil prices rose past $104 a barrel to end the week at a 29-month high, as fighting in Libya intensified and the world's largest petroleum consumer, the U.S., reported that employers added nearly 200,000 new jobs in February.

The Labor Department said Friday that the unemployment rate dropped to 8.9 percent in February. While that's positive news for the economy, the report also suggests that more Americans are driving to work at a time when world oil supplies are under pressure because of unrest in Libya and the Middle East.

Benchmark West Texas Intermediate crude for April delivery gained $2.51 to settle at $104.42 a barrel on New York Mercantile Exchange, the highest level since Sept. 26, 2008.

Story: U.S. employers added 192,000 jobs in February

In London, Brent crude rose $1.18 to settle at $115.97 per barrel on the ICE Futures exchange.

Most of Libya's oil production has been shut down because of the crisis, and experts say the country's oil fields will be threatened as long as there's no clear leader in charge.

Tensions escalated on Friday as forces loyal to Moammar Gadhafi used tear gas against protesters in Tripoli. Rebels also attacked the oil port of Ras Lanouf, about 380 miles (611 kilometers) east of Tripoli. They battled with about 3,000 pro-Gadhafi troops, mainly around the facility's airstrip. As night fell it was not clear who was in control of the complex. Earlier in the week, rebels pushed back Gadhafi forces from a larger oil facility.

Saudi Arabia has increased production to make up for the loss of Libyan crude, but a lengthy struggle could put significant pressure on world supplies. Traders are concerned that anti-government protesters will further challenge neighboring regimes in the region. North Africa and the Middle East are home to the largest oil producers on earth and export a quarter of the world's oil.

Meanwhile anxious traders prepared for a weekend of uncertainty. Two weeks ago oil surged more than $7 per barrel in electronic weekend trading. The possibility that oil will jump again before Monday trading begins kept prices up.

Oil is getting more expensive as the U.S. economy continues on the road to recovery. Besides the lower unemployment rate last month reported by the government, retailers said they had surprisingly strong revenue gains in February and businesses ordered more manufactured goods from U.S. factories in January.

The Energy department said this week that petroleum demand has grown for four straight weeks, resulting in unexpected drops in the nation's oil and gasoline supplies last week.

"The economy just seemed to be getting its mojo back," PFGBest analyst Phil Flynn said. "The question, now, is when will higher energy prices take that mojo away?"

Analysts say the economy can probably stay on the upswing as long as oil remains below $120 per barrel. If it goes higher, and pushes up the cost of fuel, consumers could rein in spending, more commuters may opt for public transportation and car pools, and leisure travelers will probably vacation closer to home.

  1. Top stories: Turmoil in the Middle East
    1. UN: Gadhafi's food stocks to last just weeks
    2. S. African president: Gadhafi ready for truce
    3. Libyan rebels distribute rules on POW treatment
    4. Armed residents put up resistance to Syrian army
    5. Libyan rebels distribute rules on POW treatment

"That's when it really starts to do damage," Flynn said.

If oil rises to $150 or more per barrel, and holds at that level for months, some economists think another recession could be triggered.

In other Nymex trading for April contracts, heating oil added 4 cents to settle at $3.0893 per gallon and gasoline futures gained 2.02 cents to settle at $3.0464 per gallon. Natural gas picked up 3.1 cents to settle at $3.809 per 1,000 cubic feet.

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Explainer: Overview of Libya's oil resources

  • Image: A Libyan oil worker, works at a refinery inside the Brega oil complex
    AP

    OPEC member Libya is the 17th largest producer in the world, third largest producer in Africa and holds the continent's largest crude oil reserves. It normally pumps around 1.6 million bpd, 85 percent of which is exported to Europe and its output is equivalent to about 2 percent of global oil consumption.

  • Libya's place in the oil producing world

    How the country measures up in crude supplies and production.

  • Exports

    Before the war, Libya was a net exporter with domestic consumption estimated at only around 270,000 bpd.

    Europe was most affected by Libyan oil export disruptions. About 28 percent of Libya's oil went to Italy, 10 percent to Germany, 11 percent to China and France and 3 percent to the United States.

    Libyan oil accounted for about 23 percent of Ireland's oil and about 22 percent of Italy's, according to the IEA.

    Around 13 percent went east of the Suez Canal to Asia.

    The shortfall from the loss of Libyan output was covered by alternative sources such as Nigeria and Azerbaijan, which produce similar light crude oils to Libyan oil.

    Saudi Arabia also brought some it its spare capacity online, according to Saudi sources. The kingdom promised to fill any supply gap caused by the unrest in Libya although it produces heavier crude with higher sulfur content than Libya.

  • Infrastructure

    Reuters

    Oil fields
    Most of Libya's oil fields are located in and around the Sirte Basin, in the northeastern part of the country, which contains around 80 percent of the country's proven reserves.

    Other key areas include the Ghadames Basin, about 240 miles south of Tripoli and Cyrenaica Basin in the northeast and the Murzuq oil field in the desert in the south of the country.

    Libya has five domestic refineries with a combined capacity of 378,000 barrels a day:

    Azzawiya Oil Refining Co
    Sarir Refining
    Sirte Oil Co
    Tobruk Refining
    Ras Lanuf Oil & Gas Processing Co

    Ports
    Libya exported various grades of light crude from six major terminals, five of which are located in the eastern part of the country, where protests erupted near the second city of Benghazi.

    Following are the eastern terminals with pre-war loading volumes in January, 2011 provided by the IEA.

    Es Sider 447,000 barrels per day
    Marsa El Brega 51,000 bpd
    Ras Lanuf 195,000 bpd
    Tobruk 51,000 bpd
    Zueitina 214,000 bpd
    Zawiyah 199,000 bpd (January exports)
    Oother unspecified terminals 333,000 bpd

  • Companies

    Image: Libyan oil worker, works at a refinery inside the Brega oil complex
    AP

    Libya's state company
    Under the Gaddafi regime, Libya’s oil industry was run by the state-owned National Oil Corporation (NOC), which was responsible for managing exploration and production sharing agreements with international oil companies. Along with smaller subsidiary companies, the NOC accounted for around 50 percent of the country's oil output.

    Foreign players
    Major oil companies operating in Libya include:

    BP (Great Britain)
    ConocoPhillips (United States)
    Eni (Italy)
    ExxonMobil (United States)
    Hess Corp (United States)
    Marathon (United States)
    Occidental Petroleum (United States)
    OMV (Austria)
    Repsol (Spain)
    Shell (United States)
    Statoil (Norway)
    Wintershall, a unit of BASF (Germany)

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