Oil fell for the first time in three days as speculation that fighting may subside in Libya eased concern supply cuts will spread through the Middle East.
Fed by fears of widening Middle East unrest that has slashed Libya's exports, US crude closed yesterday above $105, its highest since September 2008.
Today, following reports that Libyan leader Muammar Gadafy was looking for a way to step down, it slid 75 cents to $104.68, while ICE Brent crude for April shed 68 cents to $114.36 a barrel by 4.21am Irish time, after having hit $119.79 on February 24th, the highest price since 2008.
"There's a sense in the market that the civil unrest will ease and oil will probably collapse," said Jonathan Barratt,
managing director of Commodity Broking Services in Sydney. Prices may slip to $85 a barrel should the market start focusing on rising US inventories, he said.
Kuwait, the United Arab Emirates and Nigeria were to ramp up their production by as much as 300,000 barrels per day in coming weeks, the paper said, quoting industry officials.
The Financial Times today reported members of the oil body Opec are joining Saudi Arabia in raising output to cool soaring prices and allay fears of a supply crunch in the West.
The production increase, expected by early April, would - together with the earlier rise by Saudi Arabia - almost make up the shortfall in supply from falling Libyan crude exports, it added.
Abu Dhabi National Oil Co informed its Asia customers on March 1st it would supply full volumes of Lower Zakum, Umm Shaif and Upper Zakum crudes although there was still a 10 per cent cut in its flagship Murban allocation.
Last month, Kuwait notified at least three Asian term buyers it would supply crude for April-June at 5 per cent below contracted volumes, the same as in January-March, industry sources familiar with the matter said.
Opec producers have said there was no shortage of crude supply.
Qatar's Energy Minister said yesterday that Opec was assessing the oil market to determine whether it should hold an extraordinary meeting, but added there was no shortage of supply in the market.
Opec member Algeria is concerned about Libyan supply disruptions but sees no physical crude oil shortages globally, the country's oil minister said yesterday.
Reuters, Bloomberg
