NEW YORK — Oil fell below $97 per barrel Monday just days after spiking above $100. Last week’s surge continued to ripple through global pipelines, however, as gasoline prices jumped 8 cents a gallon over the weekend.
Crude dropped on reports that Libya was still exporting oil. Shipments were thought to have halted last week as protesters clashed with the government and strongman Moammar Khadafy lost control of many of the country’s oil fields. But industry officials said Monday that a tanker bound for China was loading oil in the Libyan port of Tobruk. Saudi Arabia also was boosting exports.
Benchmark West Texas Intermediate crude for April delivery lost 91 cents to settle at $96.97 per barrel on the New York Mercantile Exchange. In London, Brent crude fell 34 cents to settle at $111.80 per barrel on the ICE Futures exchange.
Traders said there is a “fear premium” of $15 to $20 per barrel built into the price of oil to account for further disruptions in shipments as pro-reform movements have swept through North Africa and the Middle East. Oil prices should slide as the situation in Libya stabilizes, analysts said.
However, energy markets are so rattled right now that continued unrest in other major oil producers, including Algeria and Oman, could keep prices volatile this week.
“The market is going to be on a hair trigger,” PFGBest analyst Phil Flynn said. “If something else happens, get ready for prices to shoot back up.”
Michael Lynch, president of Strategic Energy & Economic Research, expects oil prices to continue to fall this week as rebels strengthen their hold over Libya. Still, further unrest in the region will hold prices artificially high for months to come, making diesel and gasoline more expensive as the world’s major economies continue to work their way out of recession.
“One thing we know with oil so high,” Lynch said, “is this is not going to be a robust year for the economy.”
Bank of America analyst Francisco Blanch said the Libyan revolt created a massive disruption in world oil supplies that will put a heavy burden on Saudi Arabia and other countries with spare inventories.
