Oil Settles Below $102 as Iraq Fighting Ends
Oil prices plunged $4 to below $102 a barrel Monday as a week of heavy fighting in Iraq's oil port city of Basra ended and officials predicted a recovery in crude exports from the hub within a day.
U.S. crude dropped $4.04 to $101.58 a barrel after trading as low as $100.25, extending losses from Friday.
London Brent crude fell $3.47 to $100.30 a barrel. "There has been some extraction of the geopolitical risk premium because of the easing of military action in southern Iraq, and the exports are likely to be back on track tomorrow," said Jim Ritterbusch, president of Ritterbusch & Associates.
Iraqi officials said operations on a pipeline feeding Basra's export terminal would recover by Tuesday, after a bomb attack that occurred during an Iraqi military crackdown on Shi'ite militants in the area cut exports by about 100,000 barrels per day.
Shi'ite cleric Moqtada al-Sadr called his Mehdi fighters off the streets Sunday to end a week of bloodshed, easing fears of further damage to oil infrastructure in the region.
The attack on the pipeline marked the first disruption of exports from southern Iraq since 2004.
The losses extended a pullback in oil prices from a record earlier in March of $111.80 a barrel, and came alongside selling across many commodities as investors reaped profits from a string of record highs after pouring cash into the asset class to hedge against inflation.
"There's broad-based selling across the commodities spectrum as some of the funds book some last-minute profits on the last day of the quarter," said Ritterbusch.
Worries that the credit crisis and the wider economic problems of the United States could drag down demand growth have also weighed on prices. U.S. oil demand over the past four weeks has averaged 2.2 percent below a year ago, according to the most recent government data.
Oil's losses came as U.S. stocks gained on cautious optimism regarding a White House plan to boost the Federal Reserve's role in overseeing financial institutions.
Traders were also eyeing potential disruptions from Africa, after oil workers from OPEC member Nigeria on Friday threatened industry-wide strike action over a dispute with ExxonMobil.
Oil workers in Gabon also threatened to extend a strike that already has shut in around 90,000 bpd of the nation's total output of around 270,000 bpd.