Oil futures fell as traders bet that some Libyan exports will resume quickly.
Prices have begun to fall back from recent highs, as hopes were raised that oil exports could resume with the help of Qatar, although the Qataris have yet to make any formal statement on the matter.
A representative of rebels battling forces loyal to Libya ruler Col. Moammar Gadhafi said oil fields in territory it controls are currently producing between 100,000 barrels and 130,000 barrels a day and that it plans to begin exporting in less than a week. Before the conflict began, Libya exported 1.3 million barrels a day of crude oil, but shipments completely stopped as fighting intensified.
In late morning, the front-month May Brent contract on London's ICE futures exchange was down $1.12, or 1%, at $113.68 U.S. a barrel. The May contract on the New York Mercantile Exchange was down $1.13, or 1%, at $102.85 U.S. a barrel.
Others, including J.P. Morgan, warned the outcome of the fighting is too unclear to be sure when Libya's oil will return to the market.
Rebels regained the key oil towns of Brega and Ras Lanuf Monday, but Col. Gadhafi maintains his grip over the capital, Tripoli, and his hometown, Sirte. Rebel forces were pushed back by loyalists Tuesday to a town some 100 kilometres east of Sirte, Agence France-Presse reported.
The current strife in North Africa and the Middle East has added $10 a barrel to the oil price, according to Goldman Sachs.
More uncertainty over supplies could result from a presidential election in Nigeria, scheduled for April 9. Violence usually precedes Nigerian elections, particularly in the oil-rich Niger Delta region. Nigeria produces about 2.2 million barrels a day, according to the International Energy Agency.
Even with multiple points of conflict in Africa and the Middle East, price increases may be limited by what the global economy can support. Even at current levels, prices have the potential to derail the global economic recovery, IEA Executive Director Nobuo Tanaka said Tuesday.
In late morning, the ICE's gasoil contract for April delivery was down $16, or 1.6%, at $965.50 U.S. a metric tonne, while Nymex gasoline for April delivery was down 1.49 cents, or 0.5%, at $3.0125 U.S. a gallon.
