LONDON, Mar 8 – Oil sank Tuesday, one day after hitting 2.5-year peaks, as OPEC held discussions over Libya, and amid unconfirmed reports that Moamer Kadhafi was seeking a safe exit, traders said.
New York\’s main contract, light sweet crude for delivery in April, sank 95 cents to $104.49. On Friday it had soared as high as $106.95 — which was the highest level since late September 2008.
In London, Brent North Sea crude for April dropped 54 cents to $114.50 per barrel.
"Today there has been a relief fall in the price of crude oil, as OPEC could be looking to its key producers to increase output," ETX Capital trader Manoj Ladwa told AFP.
"Along with talk of tensions easing in Libya and Kadhafi looking for a safe exit, crude oil has retraced some of its recent gains.
"My only concern is that tensions are still there for other Middle East countries and any further uprisings could see oil spike further."
Members of the Organisation of Petroleum Exporting Countries (OPEC) are holding consultations over the oil market in light of the Libyan turmoil, the Kuwaiti oil minister said on Tuesday.
"We are in consultation but have not yet decided which direction," we are heading, Sheikh Ahmad Abdullah al-Sabah told reporters when asked if OPEC was discussing whether to raise crude production.
He also denied that Kuwait, OPEC\’s fifth largest producer, has increased production. "We did not increase," he said.
Crude oil had surged on Monday as traders fretted about escalating clashes in Libya between forces loyal to Kadhafi and rebels seeking to end his four-decade rule.
An intermediary of Kadhafi offered talks with the leadership of rebels fighting his regime, but it was rejected outright, a rebel spokesman said Tuesday.
"I think there was an attempt from Kadhafi\’s people with the provisional national council. It has been rejected," said Mustafa Gheriani, a media organiser at the rebels\’ main headquarters at the court house in Benghazi.
"We\’re not going to negotiate with him. He knows where the airport is in Tripoli and all he needs to do is leave and stop the bloodshed."
Another rebel representative told AFP on condition of anonymity that a mediator approached the rebels\’ self-declared national council on Monday but that there would be "no talking" until Kadhafi leaves the country.
Prices also weakened on Tuesday as the United States refused to rule out tapping its oil reserves to ameliorate the impact of high oil prices.
White House chief of staff William Daley said Sunday that the US had not ruled out tapping its strategic oil reserves.
However, analysts said the dip in crude prices would be short-lived, as cyber-activists in OPEC kingpin Saudi Arabia called for protests demanding change in the kingdom this Friday.