Oil fell on Monday after Libya’s Muammar Gaddafi appeared to accept a cease-fire plan with rebel forces, increasing the chances that Libyan crude will return to world markets soon. Crude prices were also pushed down as the International Monetary Fund (IMF) cut its forecast for United States (US) growth this year and Goldman Sachs warned that consumers in the US are starting to conserve energy in the face of high oil prices.
Benchmark West Texas Intermediate crude for May delivery lost $2,87 to settle at $109,92 per barrel on the New York Mercantile Exchange. Earlier in the day, crude rose as high as $113,46 per barrel, the highest level since September 2008.
The drop followed news over the weekend that Gaddafi had accepted a “road map” to a cease-fire from a delegation of African leaders. Although rebel leaders later rejected the truce proposal because it did not include Gaddafi stepping down, traders considered the cease-fire move a sign that oil exports will start again once the fighting stops.
“A cease-fire could ultimately lead to a stable enough environment that could accommodate at least some oil production” in Libya, analyst Jim Ritterbusch said. Before the rebellion broke out, Libya produced about 1,6-million barrels of oil per day and supplied nearly 2% of world demand. Most of Libya’s oil went to refineries in Europe.
Petrol demand
Goldman Sachs analyst Jeffrey Currie recommended that investors stop buying a specific oil contract that the investment bank had previously recommended. Currie said the US appears to have started cutting oil consumption as consumers face higher prices for petrol and other petroleum-based fuels. Currie focused on the oil contract for December delivery, but investors will likely take that as a general recommendation to sell, analyst Stephen Schork said. Goldman Sachs is a major player in oil markets and it has been one of the most vocal about the potential for oil to rise this year, Schork said.
“They’re one of the big guys that everyone follows, and they have a tremendous influence on what other people do,” Schork said.
The IMF lowered its forecast for US growth this year to reflect the increased burden of higher oil prices. The IMF said the economy of the world’s largest oil consumer will expand by 2,8% this year, down 0,2 of a percentage point from the IMF projection in January.
Traders and analysts are awaiting a trove of data about world oil supply and demand that it is expected on Tuesday from the Organisation of Petroleum Exporting Countries, the International Energy Agency and the Energy Department’s Energy Information Administration. MasterCard SpendingPulse also will release its latest survey of retail petrol demand in the US.
In other Nymex trading for May contracts, heating oil lost 6,72 cents to settle at $3,2525 per gallon and petrol futures dropped 6,02 cents to settle at $3,2005 per gallon. Natural gas gained 6,7 cents to settle at $4,108 per 30 cubic metres.
In London, Brent crude gave up $2,70 to settle at $123,42 per barrel on the ICE Futures exchange. — Sapa-AP