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Oil prices fall on prospect that Libyan oil will return to markets amid weak economy
NEW YORK (AP) ' Prices for international crude oil fell Monday, on the prospect that exports from Libya will return to the market at a time of economic weakness.
It will be at least several months before Libya is producing enough oil to start exporting it again. But any extra shipments could lower the price of U.S. gasoline, which has already come down more than 40 cents a gallon from its peak in May.
Brent crude, which is used to price many international oil varieties, dropped $1.43 to $107.19 per barrel in London. Benchmark West Texas Intermediate crude for October delivery briefly fell, then rose 51 cents to $82.92 per barrel in New York in early afternoon trading as traders used a financial strategy to take profits.
Now, traders are also considering the possibility that Libya's six-month rebellion could return more oil to markets. Over the weekend, rebels overran forces loyal to Moammar Gadhafi and claimed control of much of the nation's capital. Gadhafi's whereabouts were unknown and two of his sons were captured by rebels.
The ouster of Gadhafi, who ruled the North African nation for four decades, would clear the way for a new government and a return to oil production, which stopped during the conflict.
Libya sits on the largest oil reserves in Africa. Before the uprising, it was the world's 12th largest exporter, delivering more than 1.5 million barrels per day to mostly European markets.
How quickly its production can be restart depends on a number of factors, including how fast the rebels form a government and how soon international oil companies move workers back to Libya. It will also take time for the nation's oil fields and pipelines to come up to full speed.
Technicians from Italian oil company Eni were already working to restart oil and natural gas production in Libya, according Italian Foreign Minister Franco Frattini. Eni is the largest foreign producer in the country.
Eni declined to elaborate on the comments, but noted that restarting production could take some time ' a couple months for natural gas and even a year for oil.
Repsol, another big producer in Libya, was not reachable for comment.
In other Nymex trading for September contracts, heating oil lost less than a penny to $2.8954 per gallon and gasoline futures dropped 3.67 cents to $2.8045 per gallon. Natural gas fell 4.9 cents to $3.891 per 1,000 cubic feet.
Colleen Barry in Milan, Italy, Alex Kennedy in Singapore and Alan Clendenning in Madrid contributed to this report.