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Asia:Oil eases in Asia amid conflicting Libya reports

https://www.chemnet.com   Mar 08,2011 commodityonlien
World oil prices dropped for the first time since Friday on reports that Libya tensions may ease soon and also on profit taking by some investors.

April delivery crude in the US was seen trading at $104.89 a dollar at 12.00 noon Singapore time while Brent crude was at$114.71 a barrel in London.

Analysts said reports that Libyan dictator Muammar Gadhafi offered to relinquish powers in favour of a safe passage to him and family definitely had an effect on oil prices.

Analysts also said profit taking by some investors from earlier gains also hit the black gold for the first time in three days and the trend might continue till Wednesday.

They added that Brent crude dipped the most Monday after traders took profits from its unprecedented premium to U.S. futures. The Brent/WTI spread has shrunk by more than $7 since then, ending Monday at its narrowest since January.

According to senior commodity analysts Mike Zarembski, the political instability that has arisen in North Africa and the Middle East has put a “risk premium“on oil prices.

However he said crude output lost from Libya is being made up from other OPEC nations who have spare capacity, primarily Saudi Arabia despite the fact that the grade of crude oil is not as high as that from Libya.

He said that oil price rise comes at a time when the world's largest oil consumer, the U.S., is experiencing an oil glut. This is especially true at the delivery point for the NYMEX WTI contract in Cushing Oklahoma, where oil in storage is at a record level.

However, since oil is truly a global commodity, any distortions in one area will not be enough to keep oil prices in check, especially as we are seeing some improved economic data out of the U.S. and parts of Europe, he added.

On Monday, New York's main contract, light sweet crude for delivery in April, settled at $105.44 a barrel, a gain of $1.02 since Friday.

The benchmark WTI futures contract had already gained more than 20 percent in the past two weeks. Earlier Monday, it reached an intraday peak of $106.95, the highest mark since September 26, 2008.

In London, Brent North Sea crude for April climbed as high as $118.50 before easing back to close at $115.04 a barrel.


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