Oil sank from 2-1/2-year highs near $120 a barrel Thursday in a late-day rout, dragged down by an unsubstantiated rumor Muammar Gaddafi had been shot and Saudi Arabia’s assurances it can counter Libyan supply disruptions. A U.S. official said Washington had no reason to believe the Libyan leader was dead after the rumor swept through oil markets and sent prices tumbling more than $2 a barrel just before settlement.

London Brent crude [LCOCV1  112.60    1.24  (+1.11%)   ] hit $119.79 a barrel — the highest since August 2008 — in early activity then dropped to $110.51 late, marking the widest trading range for the benchmark since September 2008. Brent settled up 11 cents at $111.36 a barrel, dropping more than $1 in post-settlement activity.

U.S. light, sweet crude [CLCV1  98.43    1.15  (+1.18%)   ] for April delivery settled down 82 cents at $97.28 a barrel, after touching $103.41, the highest since September 2008.

The IEA estimates the unrest has cut off 500,000 to 750,000 barrels per day (bpd) of Libyan output. Italian oil company ENI, the biggest foreign operator, estimated 1.2 million bpd of the country’s 1.6 million bpd had been shut down as international firms pull out workers.

Options trade volumes for the New York Mercantile Exchange’s U.S. oil contract hit a record on Wednesday as the unrest sent prices higher, with traders saying bets were being laid for a spike to $120 a barrel by April.

2 thoughts on “Muammar Gaddafi Shot Rumor: Oil Settles Near $97”

Comments are closed.