By Claudia Assis and Sarah Turner, MarketWatch
SAN FRANCISCO (MarketWatch) — Oil prices drifted lower on Tuesday as rebels continued to gain ground in Libya and signaled efforts to resume pumping and exporting the country’s oil.
Light, sweet crude oil for May delivery (CLK11 103.63, -0.35, -0.34%) declined 8 cents to $103.91 a barrel on the New York Mercantile Exchange.
In Monday’s regular session in New York, oil futures settled down 1.4% to a one-week low after reports that Libyan rebel forces had captured key eastern oil areas.
Libyan rebels “are now setting up procedures to start selling oil without the penalty of sanctions,” analysts at MF Global said in a note on Tuesday. President Barack Obama made his case for intervention in Libya late Monday.
In Japan, the battle to stabilize reactors at the critically troubled Fukushima Daiichi nuclear power plant continued.
A Japanese government spokesman said Tuesday that there were no plans to nationalize plant operator Tokyo Electric Power Co. (JP:9501 566.00, -130.00, -18.68%) (TKECY 10.50, 0.00, 0.00%) . Read more on Japan's nuclear woes.
“A more defensive tone will likely set in over the course of the next few days given the gravity of the Japanese situation and the continued gains [Libyan] rebels are making,” the MF Global analysts said.
If political risk abates, then oil prices may fall back below $100 a barrel, given that prices should trade closer to $90-$95 a barrel due to the balance of supply and demand, wrote Stephen Thornber, a fund manager at Threadneedle.
“Longer-term we see the industry dynamics as supporting higher energy prices as demand outstrips growth in productive capacity,” he said.
Other energy products were lower on Tuesday, with natural gas leading losses. The April contract (NGJ11 4.29, -0.09, -2.01%) , which expires at end of trading Tuesday, declined 7 cents, or 1.8%, to $4.29 per million British thermal units. Natural gas for May delivery (NGK11 4.36, -0.09, -1.93%) traded at $4.36 per million Btus, losing 8 cents.
Gasoline for April delivery (RBJ11 3.02, -0.01, -0.29%) , a contract which expires later this week, lost less than a penny to $3.03 a gallon.
April heating oil (HOJ11 3.01, -0.01, -0.35%) , also expiring later on the week, declined less than 1 cent to $3.02 a gallon.
