Singapore: Oil prices dipped but stayed with sight of their highest levels since 2008 on Tuesday, with Brent near $121 a barrel, supported by unrest in the world’s top oil exporting regions and delays to elections in Nigeria.
Brent crude for May fell 27 cents to $120.79 a barrel at 0804 GMT, after closing at $121.06 a barrel on Monday, the highest settlement since 1 August, 2008.
US crude fell 36 cents to $108.11 a barrel after settling at $108.47 on Monday, the highest since 22 September, 2008.
After Monday’s rise, investors booked profits, said Jonathan Barratt, managing director of Commodity Broking Services in Melbourne.
“WTI had a good run at $108, and it needs to stay above $108 to be bullish. But last night, the spread between WTI and Brent blew out,” said Barratt.
“This gives us a clue that perhaps there is more demand in Europe, and more concerns in Europe with what’s happening in the Gulf region.”
The loss of Libyan oil exports as civil war grips the country has forced top oil exporter Saudi Arabia to raise supply, eroding spare capacity and intensifying the perception of tight fundamentals as the basis for price gains on even relatively small output interruptions, analysts said.
A labour strike in Gabon helped push prices higher on Monday, after it halted around 240,000 barrels per day (bpd) of supply, though Royal Dutch/Shell on Tuesday said it expects output back to normal within days after the oil union agreed to end to the strike.
Oil markets were also concerned about the potential for elections to unleash supply problems from OPEC-member Nigeria. Presidential elections there were postponed a week due to logistical problems.
Nigeria has a history of contentious elections and militants there have previously hit oil supplies.
Both Nigeria and Gabon produce the sweet crude that is at a premium due to Libyan outages.
“Anything that affects Brent or Africa is going to be important, especially under the current situation in Libya,” said Tony Nunan, a risk manager with Tokyo-based Mitsubishi Corp.
“This is the worst possible time to have an outage in Africa regardless of their production. The spread between the two crudes have widened, although not as bad as before.”
Delayed loading of several cargoes of Forties crude -- which typically sets the level of the dated Brent benchmark -- will add to supply pressure.
The discount of US crude futures to Brent widened to $12.82 at 12:03pm, short of record levels of $17 a barrel at the start of March.
Rebels in Libya may this week sell the first tanker full of crude since the uprising against Gaddafi halted exports from the North African country and sent oil prices up from $100.
Oil remained well above the preferred range of top oil exporter Saudi Arabia and its Gulf neighbour and Opec ally Kuwait, but there is no sign yet of a coordinated output increase from the producer group.
Saudi Arabia has not changed its view of the optimal level for oil prices and is still seeking $70 to $80 a barrel, a Saudi official told Reuters on Monday.
Kuwait would like to see world oil prices decline but does not expect them to fall below $90 a barrel, Farouk al-Zanki, chief executive of state oil company Kuwait Petroleum Corp (KPC), said on Monday.
High energy prices are fueling inflation in consuming countries, many of which are also suffering from rising food prices.
Rising global commodity prices had driven the recent increase in US inflation, US Federal Reserve chairman Ben Bernanke said on Monday.
Bernanke said US inflation would likely be short-lived, even though rising commodity prices were being driven by fundamentals.
In South Korea, the world’s fifth-largest oil producer, the government has put pressure on the country’s top refiners to cut fuel prices in a move that is likely to cost them hundreds of millions of dollars in lost revenue.
Weekly industry and government petroleum inventory reports are forecast to show a 1.4 million build in US crude inventories, a 1.9 million barrel decline in gasoline stockpiles and a 200,000 barrel drop in distillates, according to a Reuters poll of analysts.