Oil prices were mixed Monday as Moammar Gadhafi's regime appeared to be closer to tottering on the brink of defeat.
Brent oil, which is tied to the European market, dropped 1% to $107.55 U.S. a barrel, while U.S. crude prices rose more than 1% to $83.46 U.S. a barrel.
The disparity between the two prices is due to the fact that Brent will feel the more immediate impact from Libyan oil coming back online, whereas U.S. prices are more insulated.
Even though Brent crude prices are falling, it's unlikely that there will be a glut of oil flooding the markets anytime soon, said Dan Dicker, an oil trader for 25 years and the author of "Oil's Endless Bid: Taming the Unreliable Price of Oil to Secure Our Economy."
"I see the price coming down on Brent as more of a knee jerk reaction," said Dicker, estimating that it will take a long time for Libyan oil to flow back into the market. "You're not going to see a barrel of oil from Libya for at least a year."
Manouchehr Takin, senior petroleum analyst at the Center for Global Energy Studies in London, said it could take at least six months for Libyan oil to enter the European market, and it's more likely to be a gradual flow.
But the state of the oil infrastructure in Libya remains uncertain, he said, and there could be unforeseen factors that would interfere with the flow.
For example, he said there was trouble bringing Iraq's oil supply back on line after the U.S. invasion of 2003, because Iraqi engineers were being murdered by hardliners for cooperating with Americans.
Dicker said that Brent oil will probably recover in the next few days, once traders realize that Europe won't be flooded with fresh supply from Libya.
"[Brent] might be a tremendous buy a week from now, when it becomes clear that nothing is going to happen for a year," he said.
Shares of U.S. oil producers Exxon Mobil and Chevron Corp. rose about 2% in premarket trading. U.S. oil prices are reacting to the gradual economic recovery and moving more closely with U.S. stock futures.
Meanwhile, AAA reports the national average price for a gallon of regular unleaded gasoline in the United States declined four-10ths of a cent to $3.569 U.S., according to motorist group AAA. The average price is down 54.5 cents, or about 13.25%, from the record high of $4.114 U.S. reported on July 17, 2008
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