Oil prices slip in nervous deals

3rd March 2011, Comments 0 comments

World oil prices slipped Thursday in nervous trading as investors digested Venezuela's proposal for an international peacekeeping mission to avoid a brutal civil war in Libya.

Brent North Sea crude for delivery in April dipped 63 cents to $115.72 per barrel.

New York's light sweet crude for April, known as West Texas Intermediate (WTI), shed 61 cents to $101.61.

Prices jumped on Wednesday by nearly $3 in New York as violent clashes erupted between Libyan leader Moamer Kadhafi's forces and the opposition, stoking concerns about the country's oil production.

"Reports on a peace plan for Libya have put pressure on oil prices this morning," Commerzbank analysts said in a research note to clients.

"This dip in prices is only temporary in our view."

Venezuelan President Hugo Chavez and Kadhafi have discussed plans for an international peacekeeping mission to mediate the crisis in Libya, officials said Wednesday.

Kadhafi's government has been rocked by two weeks of bloody clashes with protesters seeking to topple his 41-year-old regime.

As rebels repulsed a fierce onslaught by Kadhafi's forces on a key oil town, the longtime leader has warned that "thousands" would die if the West intervened.

However, Commerzbank analysts expressed doubts over the Venezuelan initiative.

"It is doubtful that the protesters in Libya will agree to enter negotiations with Kadhafi as the plan of Venezuelan president Chavez suggests," they said.

"Yesterday, government troops attacked a major oil terminal in Marsa El Brega. The oil city controlled by the rebels has again been subjected to attacks from the air this morning.

"Furthermore, there is still a risk of the unrest spreading to other oil producing countries of the region."

Last week, Brent oil soared close to $120 as tensions flared in Libya. Brent trades at a significant premium to WTI because of high US stockpiles.

Elsewhere on Thursday, gold fell on profit-taking, one day after striking a record $1,440.32 per ounce as investors flocked to the safe-haven precious metal amid heightened concerns over the Libyan unrest.

In recent weeks and months, oil prices have soared after popular uprisings toppled the leader of Tunisia in January, followed by long-time strongman Hosni Mubarak of Egypt in February.

"It is another day with continuing geopolitical unrest in Libya and other Middle East and North Africa countries (causing) ... further volatility and nervous trading conditions across the oil market," said Sucden analyst Myrto Sokou.


© 2011 AFP

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