Oil prices ease as Saudi downplays supply fears

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NEW YORK: Saudi Arabia's assurances Tuesday that it would counter any disruptions of the global oil market pushed crude prices down Tuesday, but Libya's ongoing turmoil kept a floor on the market.

The world's largest oil supplier has 3.5 million barrels of day in spare capacity and is building up inventories in strategic locations, Oil Minister Ali Naimi said in a statement clearly aimed at calming markets.

"The Kingdom of Saudi Arabia has long been committed to promoting market stability in the interest of both producers and consumers, and in support of global economic growth and development," Naimi said.

"Time after time we have delivered on that commitment by tapping our additional crude oil production capacity when supply conditions warranted, and Saudi Arabia will continue to reliably meet the world's petroleum needs," he said.

Prices dropped quickly following the statement, but traders clearly remained cautious over the tentative political situation in many Arab countries, including in Saudi Arabia.

New York's main contract, West Texas Intermediate for delivery in April, shed 42 cents to settle at $105.02 a barrel, one day after soaring to $106.95 -- the highest level for 30 months.

In London, Brent North Sea crude for April delivery was down $1.98 to $113.06.

"Prices are rising and falling on the temperature of the Libyan situation," said John Kilduff of Again Capital.

But Tuesday's market was also driven by "all the chatter about OPEC putting more oil on the market," he said.

Members of the Organization of the Petroleum Exporting Countries, which pumps about 40 percent of the world's oil, are holding talks over the oil market in light of the Libyan turmoil. (AFP)