Oil below $104 as traders eye Libya, US economy

[March 29, 2011]  SINGAPORE (AP) -- Oil prices extended losses below $104 a barrel Tuesday in Asia as traders eyed gains by Libyan rebels seeking to topple Moammar Gadhafi and restart crude exports from the OPEC nation.

Benchmark crude for May delivery was down 50 cents to $103.48 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract dropped $1.42 on Monday to settle at $103.98.

In London, Brent crude was down 48 cents at $114.10 a barrel on the ICE futures exchange.

Oil prices have come off near two-year highs above $106 last week after coalition bombing pushed back Gadhafi forces and allowed rebels to retake key oil ports. Fighting is expected to become more fierce as rebels approach the capital Tripoli -- a Gadhafi stronghold.

Trading volume of oil futures fell last week to its lowest level this year as investors remained glued to not only the Middle East, but also Japan. The Japanese government said it would release 22 days worth of inventories from its strategic petroleum reserves to ease shortages in the regions devastated by the March 11 earthquake and tsunami.

"This decline in volumes reflects a market now watching and waiting as it assesses the impact of the government responses to recent events," Goldman Sachs said in a report.

Traders are also mulling whether the U.S. economic recovery is strengthening. The Conference Board index of consumer confidence will be released later Tuesday, and analysts will be looking for signs that buying sentiment has improved in tandem with the falling unemployment rate.

"If we see a disappointing consumer confidence number and a higher dollar there is a very real chance" of oil falling to $100 or below before the end of the week, energy consultant The Schork Group said.

The U.S. dollar has weakened so far this year, making oil cheaper for investors with other currencies.

In other Nymex trading for April contracts, heating oil was steady at $3.02 a gallon and gasoline fell 0.4 cent at $3.02 a gallon. Natural gas dropped 1.4 cents to $4.36 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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