Oil prices declined as traders decided to take profits ahead of today’s US data, which will include updates on jobless claims and balance of trade.
Traders are closely following the situation in the oil rich region of Middle East and North Africa.
Tensions are still high in Libya, where forces loyal to the country’s long time ruler Muammar Gaddafi are struggling to reclaim the parts of the country that have been taken over by the opposition.
The sides are currently fighting for the control over the oil port of Ras Lanuf.
The unrest has reduced Libya’s oil production by half, sparking fears of a supply shortage and driving up oil prices. The North African nation holds the continent’s largest oil reserves and accounted for roughly 2 percent of global production before the mass protests erupted last month. Traders fear that the turmoil could spread to the world's largest crude oil exporter, Saudi Arabia.
Analysts are arguing about the impact that the soaring oil prices are likely to have on global economy.
UBS (NYSE:UBS) has kept its global GDP growth forecasts unchanged at 3.9 percent and 3.8 percent for this and next year respectively, while acknowledging the possibility of a “temporary soft patch”.
Merrill Lynch had a slightly different opinion, however, its initial forecasts were a bit more bullish.
Bank of America’s (NYSE:BAC) wealth management division said that it had been leaning towards raising its forecasts for global growth as the data flow has improved, however, the oil prices surge “more than cancelled” the upgrade.
As a result, Merrill has trimmed its global GDP growth projections for 2010 and 2011 by 0.1 pecent to 4.3 percent and 4.8 percent respectively.
US light, sweet crude for April delivery, which is currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), declined to US$102.74/barrel, while May crude fell to US$104.01/barrel.
April Brent crude last traded at US$114.53/barrel on the ICE Exchange.
Supermajors BP (LON:BP) and Shell (LON:RDSB) declined marginally.
Cairn Energy (LON:CNE) was down 3.5%, while BG Group (LON:BG) and Tullow Oil (LON:TLW) lost nearly 3%.
Amec (LON:AMEC) posted a small lost. Fellow engineering company Petrofac (LON:PFC) dropped 3%.
Soco International (LON:SIA) was the top performer among the midcaps, climbing 2%.
Heritage Oil (LON:HOIL) also did well, tacking on nearly 1%.
Salamander Energy (LON:SMDR) headed in the opposite direction, shedding 3.2%.
JKX Oil & Gas (LON:JKX) and Premier Oil (LON:PMO) lost 1.4%, as did service company Wood Group (LON:WG).
Melrose Resources (LON:MRS) declined 1%.