Oil below $112 but remains near 30-month highs - KMOV.com

Oil below $112 but remains near 30-month highs

Oil prices dropped below $112 a barrel Monday but remained near 30-month highs, as traders continued to eye developments in the Middle East and ongoing weakness in the U.S. dollar.
By midday in Europe, benchmark crude for May delivery was down 94 cents at $111.85 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, the contract jumped $2.49 to $112.79, the highest since September 2008.
In London, Brent crude for May delivery was down $1.06 to $125.59 a barrel on the ICE Futures exchange.
Oil prices have soared about 33 percent since mid-February as traders worry about the impact on crude supplies from the uprisings in the Arab world, most recently in Libya.
Violence has also escalated between Palestinians in Gaza and Israel. Since Thursday, Palestinians have fired more than 120 rockets and mortar shells into southern Israel, prompting Israeli reprisals that have killed 19, the most intense fighting between Israel and Gaza militants since January 2009.
Meanwhile, Egyptian soldiers Saturday attacked protesters calling for an investigation of former President Hosni Mubarak for embezzlement, killing at least one person and injuring 71 others. Several hundred protesters remained barricaded at Cairo's Tahrir Square.
"Fresh headlines over the weekend could portend another difficult week for oil bears," energy consultant The Schork Group said. "Gaza-Israel violence along with new protests in Tahrir Square against the military could incite another buying frenzy in the market."
In Libya, embattled leader Moammar Gadhafi agreed Sunday to a cease-fire plan mediated by the African Union, but rebels trying to oust the dictator may not agree to the deal and insisted that Gadhafi and his family must relinquish power.
Investors are also watching closely the currency markets as the U.S. dollar fell to a 15-month low against the euro last week. A weaker U.S. currency makes dollar-based commodities such as oil cheaper for investors with other currencies.
The euro was down slightly at $1.4457 on Monday from $1.4483 late Friday.
The weaker dollar "has been the most consistent factor pushing oil prices higher in 2011, as it was in 2010," said U.S. energy consultancy Cameron Hanover.
Analysts expect the surge in oil prices will undermine consumer demand, but some are optimistic higher fuel costs won't derail the global economy recovery.
"The rise in the price of oil in reaction to the spreading of unrest from Tunisia and Egypt to Libya and Bahrain remains below the threshold that is likely to have lasting impact on the global economy," said Jeffrey Morrison of MFS Investment Management. "We expect the global economic recovery to be sustained."
In other Nymex trading in May contracts, heating oil fell 3.49 cents to $3.2848 a gallon and gasoline dropped 2.95 cents to $3.2312 a gallon. Natural gas futures were down 3.7 cents at $4.004 per 1,000 cubic feet.
Alex Kennedy in Singapore and Ben Hubbard in Benghazi, Libya, contributed to this story.
(Copyright 2011 by The Associated Press. All Rights Reserved.)

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