New York’s main contract, light sweet crude for delivery in May dipped 17 cents to USD 106.95 a barrel, while Brent North Sea crude for June eased one cent to USD 121.60.
Victor Shum, a Singapore-based analyst at Purvin and Gertz international energy consultancy, said oil prices were weighed down by ratings agency Standard and Poor’s decision to cut its outlook on US sovereign debt to “negative”.
The ratings downgrade on Monday raised doubts about Washington’s ability to tackle its huge debt and fiscal deficits.
“The downbeat outlook has caused a selling out, with oil and stocks included,” Shum told.
But concerns over the unrest sweeping the Arab world and its impact on oil supplies in the crude-producing region are expected to keep prices high, he added.
“Given the geopolitical risks involving oil, I don’t expect a sharp correction in prices,” he said.
“The supply disruption in Libya is real as are the threats of further uprising in the other parts of oil-producing Middle East and North Africa.” In Libya, more than 100 people have been killed in 24 hours in the rebel-held Al-Jabal Al-Gharbi district west of Tripoli after it was pounded by Kadhafi forces, residents told on Monday.
There was also a scramble to rescue refugees trapped in the besieged port city of Misrata.