Brent Soars Above $110 as Libya Burns

Oil futures rallied above $110 a barrel on Wednesday, posting the biggest three-day percentage gain in a year, as the escalating violence in Libya could further reduce its production.

Between 300,000 and 400,000 barrels per day of Libyan output -- up to 25 percent -- has been shut down, according to Reuters calculations, marking the first cut in oil supplies related to the recent wave of anti-government unrest in North Africa and the Middle East.

After Libyan leader Muammar Gaddafi vowed in a defiant speech on Tuesday that he would not step down, promising severe punishment to his detractors, analysts fear that long-lasting supply disruptions or even permanent damage lies ahead for the OPEC member's oil industry.



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Goldman (NYSE:GS) Likes Gold on Low Interest Rates

Believing interest rates in the U.S. will remain low for some time, Goldman Sachs (NYSE:GS) sees gold continuing to rise in price for 2011, along with other commodities, including oil.

They recently stated the believe gold will continue to rise through 2012, probably peaking at somewhere around $1,750 an ounce. That's hard to believe in light of the Federal Reserve continuing to inflate the money supply and doing nothing to alleviate the recession and little or no job creation.

Goldman sees gold futures rising to $1,690 an ounce by the end of 2011.

Much is this assumes the American economy will recover, which is a huge leap of faith in light of what's happening around the world, which should take years to work its way out; including the sovereign debt crisis in Europe, which most of us will probably find out is much worse than being revealed.

As for oil futures, Goldman sees them rising to about $105 a barrel in 2011, with increasing demand during the year.

Goldman said, "Energy is historically the best performing sector when the ISM is above 50, which seems increasingly likely given strong October ISM and our US economists upgrade to their 2011 growth outlook."