Oil hovers above $102 as traders eye Libya strife

[March 22, 2011]  SINGAPORE (AP) -- Oil prices hovered above $102 a barrel Tuesday in Asia as traders mulled how long Libyan oil exports will remain shut down amid a third night of allied attacks on forces loyal to Moammar Gadhafi.

Benchmark crude for April delivery was down 14 cents to $102.19 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The April contract, which expires Tuesday, rose $1.26 to settle at $102.33 on Monday.

In London, Brent crude for May delivery was down 55 cents at $114.41 a barrel on the ICE futures exchange.

Fierce fighting during the last month has halted most of Libya's 1.6 million barrels a day of crude production, and investors are concerned coalition military intervention on the side of rebels could prolong the shutdown of oil output from the OPEC nation.

Goldman Sachs estimates that about $10 has been added to the price of oil from speculation that political unrest in the Middle East could spread to other countries and disrupt oil supplies

"These developments suggest that the $10 a barrel risk premium may prove too modest," Goldman Sachs said in a report.

Over the medium term, high oil prices could slow economic growth which in turn would reduce demand for oil, lowering the price, the bank said.

On Monday, three senior Yemeni army commanders defected and joined a pro-democracy movement that wants the U.S.-backed president to step down while protesters in Syria clashed with riot police.

In other Nymex trading for April contracts, heating oil fell 0.8 cent to $3.04 a gallon and gasoline slid 1.1 cents to $2.99 a gallon. Natural gas gained 0.1 cent to $4.17 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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