Oil prices fall as Libya rebels plan exports

NEW YORK: World oil prices fell Monday as traders kept an eye on war in Libya, where rebels said they have a deal with Qatar to resume oil exports that have been nearly shut down in the fighting. New York's main contract, light sweet crude for May, settled at $103.98 a barrel, a decline of $1.42 from Friday's closing level. In London, Brent North Sea crude for delivery in May shed 79 cents to close at $114.80 a barrel. Qatar on Monday became the second country after France to recognize Libya's rebel council, the Provisional Transitional National Council, as the "sole legitimate representative" of Libya. The council, a 31-member body representing major cities and towns in the North African country, said Sunday that rebel-held eastern Libya was already producing crude oil. A PTNC official announced the council had signed a contract for Qatar to market the crude, and that exports were expected to start in "less than a week."

"We are producing about 100,000 to 130,000 barrels a day, we can easily up that to about 300,000 a day," Ali Tarhoni, the rebel representative responsible for economy, finance and oil, told a news conference. Libya was producing 1.69 million barrels a day of crude before the unrest, but that had virtually ground to a halt.

"The acknowledgement of the rebel body as legitimate by a regional power, plus the inference over the weekend that oil production from the embattled country may be marketed with Qatar's help, was perceived as bearish in the market," said Lawrence Eagles at JPMorgan Chase Bank. Eagles noted that Libyan oil ports were being recaptured by opposition forces, as NATO-commanded coalition air support tipped the balance of power in their favour. Oil prices were gaining support "from rising political tensions in Yemen and Syria as well as the ongoing civil war in Libya," analysts at research group JBC Energy said in a client note on Monday.

"Nevertheless, with the loss of most of Libya's production being greatly factored in a Brent price of $115 per barrel, and crude output in Yemen and Syria being of relatively minor importance to global oil markets, the bullish (price) impact of this was rather small."