Global Biz
Oil falls to near $112 after bin Laden killed
(Agencies)
Updated: 2011-05-02 20:06
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Oil prices fell sharply from 2-year highs to near $112 a barrel Monday after President Barack Obama announced that al-Qaida leader Osama bin Laden had been killed.
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On Friday, the contract rose $1.07 to settle at $113.93 and reached $114.18 during in the session, the highest since September 2008.
In London, Brent crude for June delivery was down $2.20 to $123.69 a barrel on the ICE Futures exchange.
Obama said bin Laden was killed Sunday by American special forces in Pakistan. Traders said the death of bin Laden could weaken al-Qaida's ability to carry out attacks and destabilize the oil-rich Middle East.
Some analysts mentioned market speculation that bin Laden had been thought to be targeting the oil industry in Saudi Arabia.
"The death of bin Laden does not take all risks of terrorism off the table but it does lessen one of the easy 'what if?' scenarios to justify the possibility of oil at $200 a barrel," said Olivier Jakob of Petromatrix in Switzerland.
However, al-Qaida operatives could also seek revenge for their leader's death, and political uprisings this year throughout the Middle East and North Africa that have threatened to disrupt crude supplies were not related to al-Qaida.
"The sentiment is that now that he's dead, al-Qaida will lose a bit of its impact and some of that terror premium will come out of pricing," said Gerard Rigby, an analyst with Fuel First Consulting in Sydney. "There's also some profit-taking going on as we wait to see what the impact of this news is."
Oil prices were also under pressure from Saturday's news that one of the sons and three grandchildren of Moammar Gadhafi had been killed in a NATO bombing raid, bolstering hopes that the conflict could be nearing its end.
Investors will also be eyeing the latest US unemployment numbers from April later this week for signs the job market is still improving. A big increase in new jobs could helped extend a 33 percent rally since mid-February.
"You get the feeling the US economy is really turning around now," Rigby said. "Higher prices still haven't dented demand."
Trading volume was light in Asia as markets in the Chinese mainland, Hong Kong, Taiwan, Malaysia and Singapore will closed for international Labor Day. Markets in Japan were open Monday but will be closed the next three days for Golden Week holiday.
In other Nymex trading in June contracts, heating oil fell 6.44 cents to $3.2114 a gallon and gasoline dropped 5.68 cents to $3.3416 a gallon. Natural gas futures were up 0.8 cent at $4.706 per 1,000 cubic feet.
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