Oil prices cool after big spike

NEW YORK (CNNMoney) — After rocketing higher earlier this week, oil prices were holding steady early Wednesday as investors kept a wary eye on events in the Middle East.

Crude futures for April delivery edged up 50 cents, or less than 1%, to $95.92 a barrel in electronic trading in New York.

Brent crude, the European benchmark oil price, rose $1.62, or 1.2%, to $107.40 a barrel.

Oil prices surged to their highest levels since 2008 as violence spread in Libya, the latest North African country to be swept up in a wave of anti-government protests that started earlier this year in Tunisia.

The rally continued Tuesday as investors in the United States returned to work following the Presidents’ Day holiday and Libyan leader Moammar Gadhafi took a hard line, insisting that he is still in power and cracking down on the opposition.

Libya is the first oil exporting nation to be impacted by the unrest in the Arab world. While it only contributes about 2% of global output, some analysts are worried that the unrest could spread to more significant oil exporters in the region.

The surge in oil prices lost some momentum early Wednesday, suggesting that a prices may stage a modest retreat, according to Tom Pawlicki, an energy analyst at MF Global. But investors will continue to focus on the Middle East, he added.

“The market remains on edge that tensions will migrate across the Middle East and toward major oil producer Saudi Arabia,” he said. “A spreading of potential revolution elsewhere in the Middle East may continue to boost oil pries in the near-term.” 

First Published: February 23, 2011: 7:51 AM ET