World oil prices slipped on Friday in volatile trade after crude exporter Libya declared a ceasefire with rebels, easing fears about possible damage to its energy facilities.
New York’s main contract, light sweet crude for April, settled at $US101.07 a barrel, down 35 cents from Thursday’s market close. In London, Brent North Sea crude for delivery in May shed 97 cents to close at $US113.93 a barrel.
Brent oil had plunged $US3 immediately after the ceasefire announcement from the government of Libyan leader Moammer Gadaffi.
For the market, the announcement signalled ‘‘that a wider war won’t occur in North Africa’’, said Andy Lipow at Lipow Oil Associates.
But he said there was still ‘‘a possibility of Libya being split between west and east and oil production could remain shut in for an extended period.
The pro-democracy unrest has virtually halted Libyan exports of crude oil to the West.
Crude oil prices earlier had surged after the UN late on Thursday gave the go-ahead for a no-fly zone over Libya to stop Gadaffi’s forces from crushing the pro-democracy insurgency.
A coalition of Western nations geared up on Friday to quickly launch air strikes against Libya. Libya said the ceasefire was called in compliance with the UN Security Council demands.
Amid the political unrest in the Arab world, the benchmark New York futures contract remains above $US100, Rich-Ilczyszyn at Lind-Waldock noted.
‘‘I think the risk is still to the upside,’’ he said, adding: ‘‘There is an escalation in Yemen that we are watching very closely.’’
Beleaguered Yemen President Ali Abdullah Saleh ordered a state of emergency after regime loyalists on Friday killed at least 46 protesters, according to medics, in the bloodiest clash in weeks of unrest.
Witnesses said pro-Saleh ‘‘thugs’’ had rained bullets from rooftops around a square at Sanaa University, the centre of demonstrations against Saleh, adding that more than 400 people were wounded.
Unrest in oil-producing Bahrain was also contributing to the market jitters.
Standard & Poor’s said on Friday it had cut Bahrain’s long- and short-term local and foreign currency sovereign credit ratings because of mounting political unrest in the monarchy.
Investors were tracking the latest developments in Japan, the world’s third-biggest importer of oil, as the country struggles with the aftermath of the March 11 earthquake and tsunami and races to avert a meltdown at a quake-hit nuclear plant.
‘‘Four per cent of Japan’s power plant capacities are offline on a sustainable basis after nuclear power plants have been shut down, meaning that Japan’s energy requirements have to be covered to a greater extent by fossil fuels such as oil, coal and gas,’’ Commerzbank analysts said in a research note to clients.
AFP
(Source: http://www.smh.com.au/business/markets/oil-prices-fall-after-libyan-ceasefire-20110319-1c101.html)
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