Oil rates down after Libya ceasefire declared

Sweet crude oil dropped by 35 cents at the New York Mercantile Exchange after Libyan forces announced a cease-fire, leaving light, sweet crude at USD101.07 per barrel. Meanwhile, Brent crudesettled at USD113.93 a barrel after dropping by 97 cents on the ICE futures exchange.

Other oil price movements said to be affected by the declaration include heating oil, which lost 4.06 cents.

Earlier, the United Nations adopted a resolution establishing a no-fly zone over Libya. This was followed by Muammar Gaddafi’s declaration of a ceasefire.

According to reports, the no-fly zone announcement was celebrated by Libyans in Benghazi but Gaddafi’s ceasefire was looked upon with distrust.

Nevertheless, it led to a slight subside to oil options volatility, unlike the no-fly announcement which led to a more than USD2 increase.

Libya is a major oil exporter and with the continuing internal strife, “barrels of Libyan production are going to continue to remain off the market,” said a broker and market analyst interviewed by Wall Street Journal.

Oil companies are not expected to resume production or return to Libya soon and are waiting for more improvement in the country’s political climate.

The oil industry is also taking a close look at the unrest in Yemen and Bahrain and even Japan, the world’s third largest importer of oil.

The clashes in Bahrain had recently pushed up prices of oil, countering the price slip that was caused by belief that the Japan earthquake and tsunami would hit demand.

Meanwhile, anti-war activist Phil Wilayto said the declaration of a no-fly zone is intervention by the United States. In an interview he said that it's “It's interesting over the past few weeks to see the different approaches that the United States government has taken in each of these different countries where there have been popular uprisings against governments."

While the country did not attempt to prevent government violence in Bahrain, and also "quietly applauded" Saudi Arabia's intervention, the US is "very interested" in overthrowing the Gaddafi regime in Libya, "a country that has...one of the largest untapped oil reserves in Africa."

Experts say Britain and France also have vested interests in Libya, prompting them to help in implementing the no-fly zone. Britain is said to deploy Tornado and Typhoon fighter jets.

(Source: http://www.thepoc.net/breaking-news/business/11487-oil-price-down-after-libya-ceasefire-declared.html)