By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) — Oil futures edged back from 29-month highs on Tuesday, with traders likely contrasting speculation of increased supply with the possibility of continuing turmoil in the Middle East.
Light sweet crude oil futures for April delivery (CLJ11 104.31, -1.13, -1.07%) declined 61 cents to $104.83 a barrel in electronic trading on the New York Mercantile Exchange in Asian trading hours on Tuesday.
The slight retreat came amid a report in the Financial Times newspaper that Kuwait, the United Arab Emirates and Nigeria may join Saudi Arabia in increasing output to make up for a drop-off in Libyan oil, as fighting continues to grip that country.
“For all practical purposes, the flow of Libyan crude exports is likely to be severely truncated for a significant period,” said strategists at Barclays Capital.
Foreign governments continue to prepare for possible military intervention, according to reports.
However, there were faint signs on Tuesday that Libya may find a solution itself.
Col. Moammar Gadhafi’s government has invited rebels and tribal leaders to talk about possible political solutions to the turmoil gripping the country, although that move was rejected by the rebel-led governing council on the grounds that it wasn’t sincere, The Wall Street Journal reported on Tuesday.
