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Oil prices wobble after Gaddafi killed in Libya

The death of the ousted Libyan leader and the end of the country's civil war could ease the pressure on oil prices, say analysts.

 
Oil prices wobble after Gaddafi killed in Libya

(Update) Oil prices put in a mixed performance on Thursday after Muammar Gaddafi, the toppled Libyan dictator, died of wounds suffered during his capture near his hometown of Sirte.

Brent crude for delivery in November inched up 0.27% to $108.68 per barrel, but West Texas Intermediate crude for November delivery shed 1.09% to $85.17.

The Libyan National Transitional Authority's acting prime minister, Mahmoud Jibril, confirmed Gaddafi’s death following a number of conflicting reports throughout the day. ‘We have been waiting for this moment for a long time,’ he told a news conference. ‘Muammar Gaddafi has been killed.’

Abdel Majid Mlegta, a National Transitional Council (NTC) official, told Reuters earlier that Gaddafi had been captured and wounded in both legs at dawn as he tried to flee in a convoy attacked by NATO warplanes.

‘He was also hit in his head,’ Reuters quoted the official as saying. ‘There was a lot of firing against his group and he died.’

Anti-government rebels ousted the colonel in August, ending his 42 years in power. The International Criminal Court is seeking his arrest.

Meanwhile, Libyan fighters said that they had routed the last remaining forces loyal to Gaddafi from Sirte, a coastal town, marking an end to weeks of fierce fighting that had prevented Libya’s interim rulers from declaring the country liberated.

Gaddafi and the Brent-WTI spread

‘Geopolitical tensions and revolutions are always difficult to price into the market, especially when they take place in a major oil producer nation,’ according to Kathleen Brooks at Forex.com.

Nonetheless, she noted that the Libya conflict was seen as one of the strongest forces keeping upward pressure on Brent crude oil, and one of the reasons for it maintaining a large premium to its US counterpart, WTI, in recent months.

Brooks said that in the event of large-scale Libyan oil production resuming, Brent could come under downward pressure, reducing the Brent-WTI spread.

‘We think this may happen in the long term, but we are reluctant to conclude that just because Gaddafi is dead the price of Brent will moderate.’ It is unclear, Brooks said, when the fighting will end, and the extent of the damage to production facilities remains unknown.

It is more likely that events in the Middle East will have a negligible impact on the price of Brent and the Brent-WTI spread, Brooks said, noting that the latter was also caused by excess supply at Cushing, a major hub for US oil.

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