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Crude edges higher, Brent drops 2.5% as markets eye Libya

Published 08/22/2011, 04:38 AM
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Investing.com – Crude oil futures edged higher on Monday, while Brent oil prices dropped sharply as Libya’s six-month civil war appeared close to an end, triggering speculation oil exports from the OPEC member would resume in the near-term.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at USD82.89 a barrel during European morning trade, easing up 0.18%. 

Meanwhile, on the ICE Futures Exchange, Brent oil futures for October delivery tumbled 2.55% to trade at USD106.35 a barrel.

The spread between the two contracts narrowed to USD23.46, after hitting a record high of USD26.42 on Friday.

Rebel forces entered Tripoli over the weekend, meeting little resistance from troops loyal to embattled leader Muammar Gaddafi, as they took over key parts of the capital.

According to Libyan state television, rebel forces detained Gaddafi’s eldest son, Saif al-Islam earlier Monday. Another son of Gaddafi, Mohammed, was under house arrest, reports said.

Meanwhile, NBC News reported late Sunday that Gaddafi was planning to leave for Tunisia, while China's state-run news agency added he was planning to fly to Venezuela from Tunisia.

Libya, Africa’s biggest holder of crude oil reserves, has the capacity to produce roughly 1.6 million barrels of crude a day. The country has produced approximately 100,000 barrels of oil per day since the civil war began in February.

Markets were also looking ahead to the Federal Reserve’s annual policy retreat in Jackson Hole, Wyoming later in the week, at which Fed Chief Ben Bernanke could announce additional measures to support the U.S. economy.

In its most recent statement on monetary policy released on August 9, the Fed indicated that it “discussed a range of policy tools available to promote a strong economic outlook recovery” and said it was prepared to employ the tools “as appropriate”.

Elsewhere on the Nymex, natural gas futures for delivery in October fell 1.28% to trade at USD3.886 per million British thermal units, while heating oil for September delivery dropped 1.92% to trade at USD2.869 a gallon.

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