Oil prices slip to near US$115 as Libya rebels regain control of key oil towns


Reuters

LONDON, Oil retreated on Monday with Brent slipping to around US$115 after Libyan rebels regained control of key oil towns, and unrest over the weekend was limited to minor crude exporters Syria and Yemen. Brent crude for May fell 41 cents to US$115.18 a barrel by 1028 GMT, about US$5 from a 2-1/2-year high near US$120 reached last month. U.S. crude shed 63 cents to US$104.77. Libyan rebels regained control of all the main oil terminals in the eastern half of Libya over the weekend: Es Sider, Ras Lanuf, Brega, Zueitina and Tobruk. They advanced on leader Moammar Gadhafi’s hometown of Sirte, seeking to extend their advance west. “These are positive developments which are negative for oil prices potentially,” said Olivier Jakob, oil analyst at Petromatrix. He also pointed to the fact that the U.S. dollar was slightly stronger this morning. A stronger U.S. dollar means that commodities priced in U.S. dollars are more expensive for those using other currencies. Output from Libya oilfields controlled by rebels was running at about 100,000 to 130,000 barrels per day (bpd), which could be increased to 300,000 bpd, Ali Tarhouni, a rebel official in charge of economic, financial and oil matters, said on Sunday. Libya was pumping about 1.6 million bpd before the rebellion. But some analysts and traders are skeptical about how quickly things will return to normal. “Maybe there’s some hope that with rebels regaining control of … the lion’s share of Libyan production, normality may resume soon but I think it is still too early,” said Carsten Fritsch, an analyst at Commerzbank. “Damage to oil facilities will prevent a sudden return to normal production levels.” John Drake, a senior risk consultant at UK-based consultancy Ake said that it will be necessary to bring in specialist staff to restart the damaged facilities, which could prove difficult in the short term. Christopher Bellew, an oil trader at Bache Commodities, was also skeptical of any short-term improvement in Libya.

He also pointed to extra demand for oil from Japan given its nuclear power station shutdowns, and continuing unrest elsewhere in the Middle East, all providing a floor. “It’s difficult to see there being a steep fall in prices at the moment,” he said.