Crude Oil Price Update – Prices Fall amidst Hope of a Ceasefire in Libya

Oil prices fell in the Asian market on Monday, after a delegation of the African Union travelled to Libya with the aim of brokering a peace deal between Muammar Qadhafi and the rebels. Brent crude for May delivery was priced at USD $ 126.10, registering a decrease of 0.43 percent, while WTI crude future was at USD $ 112.660 a barrel, decreasing by 0.12 percent.

South African President Jacob Zuma said that Qadhafi’s government had accepted a deal proposed by the African Union to end the bloodshed in Libya. The African Union delegates are expected to visit the rebel-held town of Benghazi this week to offer the plan to the rebel leaders, which involves an immediate ceasefire from both the parties. News about the African Union’s plan slightly eased investor’s fears about a long drawn-out crisis in Libya, with the result that Brent crude fell by 0.43 percent.
The US Dollar strengthened against the Euro after the US Congress reached a deal on the budget and averted a last-minute government shutdown. There are rumours about the Fed increasing interest rates and clamping down on monetary policies, which would result in greater strengthening of the US dollar and would force investors to stop overtrading in commodities, which was pushing oil prices upwards. However, the decline in oil prices is expected to be somewhat offset by possible supply disruptions from Nigeria after elections are held in the African nation on Tuesday.