Oil prices rose this evening, partly reversing a recent sell-off, after US petrol stockpiles dived and talks on Libya showed divisions among foreign powers seeking an end to the violence in the OPEC member.
Brent crude rose by $1.72 to $122.64 a barrel, while US crude gained 84 cents to $107.09.
Today's gains followed a two-day sell-off driven by influential commodities bank Goldman Sachs, which said a rally, which took Brent to a two-and-a-half year high above $127 on Monday, looked overdone.
Comments from representatives of consumer countries that high prices had begun to depress consumption also depressed sentiment.
The latest inventory data from the US government's Energy Information Administration, however, did not provide evidence demand had been destroyed yet. It found total product consumption over the past four weeks was up 0.1% from a year ago. Petrol stocks fell by seven million barrels last week, much more than expected. Falling reserves usually indicate higher demand.
Violence in OPEC-member Libya has shut off most of its production, which was around 1.6 million bpd before unrest began. Oilfields controlled by rebels are pumping around 100,000 barrels per day (bpd), but only a 'minimal amount' is being exported, a rebel spokesman said.
He was speaking in Qatar, where ministers attended talks on Libya's future. Some participants were eager for air strikes against Muammar Gaddafi's forces as they feared the conflict could settle into a bloody stalemate.
OPEC spare capacity should be enough to cope with such an outcome, provided the upheaval does not embroil other producer nations. Saudi Arabia alone has more than three million bpd to spare.
