Oil Prices Down on Libya News

By Colleen Barry, AP Business Writer

MILAN (AP) — Brent crude prices fell to near $107 a barrel on Monday after Libyan rebels captured most of the country's capital, boosting hopes the OPEC nation's oil exports could resume soon.

Rebels overran a large part of Tripoli after a quick advance as defense of Moammar Gadhafi's regime collapsed. Gadhafi's whereabouts were unknown while two of his sons were captured by rebels.

Prospects of an end to the Libyan civil war lifted hopes that the country would be able to gradually bring daily output back to pre-crisis levels of 1.6 million barrels of oil. However, estimates on how long that will take varied from several weeks to a full year.

Italian Foreign Minister Franco Frattini said Monday that Eni technicians were already working to restart oil and natural gas production from the country. Eni is the largest foreign producer in Libya, and most of the plants were built by its subsidiary Saipem.

Frattini told RAI state television that Eni workers have been called to Bengazi to reactivate plants and that there were technical consultations already last week.

Eni declined to elaborate on the comments, but noted that restarting production could take some time — a couple months for natural gas and even a year for oil.

By contrast, Carsten Fritsch, an analyst with Commerzbank, noted that rebels expect output to resume within three weeks of Gadhafi being toppled.

The speed with which production can be restarted depends on the state of infrastructure and how quickly oil companies move workers back to Libya. Pressure also needs to be built up in the fields and pipelines, meaning output would resume incrementally.

News of the rebels' capture of Tripoli weighed on Brent crude prices, with the benchmark contract down $1.37 per barrel to $107.25 on the ICE Futures exchange in London by afternoon European time.

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