Oil prices fell below $97 per barrel Monday just days after spiking above $100. Last week's surge continued to ripple through global pipelines, however, as gasoline prices jumped 8 cents over the weekend.
Crude dropped on reports that Libya was still exporting oil. Shipments were thought to have halted last week as protestors clashed with the government and strongman Moammar Gadhafi lost control of many of the country's oil fields. But industry officials said Monday that a tanker bound for China was loading oil in the Libyan port of Tobruk. Saudi Arabia also was boosting exports.
Benchmark West Texas Intermediate crude for April delivery lost 91 cents to settle at $96.97 per barrel on the New York Mercantile Exchange. In London, Brent crude fell 34 cents to settle at $111.80 per barrel on the ICE Futures exchange.
Traders said there is a "fear premium" of $15 to $20 per barrel built into the price of oil to account for further disruptions in shipments as pro-reform movements sweep through North Africa and the Middle East. Oil prices should slide as the situation in Libya stabilizes, analysts said.
However, energy markets are so rattled right now that continued unrest in other major oil producers, including Algeria and Oman, could keep prices extremely volatile this week.
"The market is going to be on a hair trigger," PFGBest analyst Phil Flynn said. "If something else happens, get ready for prices to shoot back up."
The Arabian Gulf Oil Co., based in Benghazi, told The Associated Press on Monday that its Tobruk terminal is open for business and at least two of the country's major eastern fields, Sarir and Misla, were still producing. Despite the chaos, Arabian Gulf hasn't been forced to cut its daily production of 220,000 barrels, company officials said.
Libya produces about 1.6 million barrels of oil per day, most of it bound for Europe.
Michael Lynch, president of Strategic Energy & Economic Research, expects oil prices continue to fall this week as rebels strengthen their hold over Libya. Still, further unrest in the region will hold prices artificially high for months to come, making diesel and gasoline more expensive as the world's major economies continue to work their way out of recession.
"One thing we know with oil so high," Lynch said, "is this is not going to be a robust year for the economy."
Bank of America analyst Francisco Blanch said the Libyan revolt created a massive disruption in world oil supplies that will put a heavy burden on Saudi Arabia and other countries with spare inventories.
Combined with an expected increase in global oil consumption this year, a supply shortage would generate another "spike and crash scenario" like the one seen in the summer of 2008, Blanch said.
Gasoline prices shot up nearly 20 cents per gallon in the past week. A gallon of regular cost an average of $3.37 per gallon on Monday, more than 66 cents higher than at the same time last year.
In other Nymex trading, heating oil for March delivery fell less than a penny to settle at $2.9389 per gallon and gasoline futures for March delivery fell 1.59 cents to settle at $2.8927 per gallon. Natural gas for April delivery added 3.2 cents to settle at $4.037 per 1,000 cubic feet.
© Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.