Oil prices drop to near $108 a barrel

PanARMENIAN.Net - Oil prices fell to near $108 a barrel Tuesday, April 5, in Asia as traders mulled whether political uprisings in the Middle East and signs of strong global crude demand justify extending a 30 percent rally since mid-February.

According to AP, benchmark crude for April delivery was down 38 cents at $108.09 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. On Monday, the contract gained 53 cents to settle at $108.47, the highest since September 2008.

In London, Brent crude for April delivery was down 28 cents to $120.78 a barrel on the ICE Futures exchange.

"Many commodity prices are reaching danger levels that, while boosting inflation in the short term, will also undermine global demand for these same commodities over the medium term, increasing the chances that prices subsequently collapse," Capital Economics said.

Most of Libya's 1.6 million barrels a day of crude output capacity has been shut down by the fighting. However, supplies from other oil producers in the Middle East and North Africa have not been disrupted, and some analysts expect oil prices will drop as protests in the region die down.