* Libya conflict unresolved, Middle East still tense
* Coming Up: API U.S. weekly inventory report
(Rpeats to further subscribers)
By Nia Williams
LONDON, March 22 (Reuters) - Oil prices slipped on Tuesday,
with Brent crude falling below $115, as investors betting oil
prices would rise with western involvement in Libya's civil war
took profits in anticipation of a slowdown in air strikes.
Anti-aircraft fire rang out across Tripoli for a third night
on Monday, but strikes are likely to become less frequent, a
U.S. general said, as Washington holds back from being sucked
into the Libyan civil war. []
Despite the slight pullback, oil prices remained strong,
driven by tensions in the Middle East, against the last peak
near $120.
Front month Brent crude <LCOc1> was 27 cents lower at
$114.69 at 0946 GMT, around $5 below a two and a half year high
near $120 hit last month.
U.S. crude for May <CLc2>, the most liquid contract before
the expiry of April later on Tuesday, shed 20 cents to $102.89.
Oil had gained around 1 percent on Monday, the first day of
trading after U.N.-backed western powers kicked off the military
campaign in Libya, but analysts said much of the Libyan supply
disruption has now been priced into the market.
"Short-term, we suspect that the crude oil market is
somewhat overextended here, as the fighting in Libya will lose
its ability to spark the market higher," said Edward Meir,
senior commodities analyst at MF Global.
"For all practical purposes, investors have reconciled
themselves with the fact not much oil will be flowing out of
Libya anytime soon."
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More on Middle East unrest: [] []
US military leads on Libya but for how long? []
Libya Graphics http://link.reuters.com/neg68r
Technical analysis on Brent []
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Violent political unrest has reached countries bordering
OPEC king-pin Saudi Arabia, the world's largest oil exporter and
only "swing state" with enough spare capacity to plug serious
production shortfalls elsewhere.
In Yemen, top generals, ambassadors and some tribes threw
their support behind anti-government protesters in a major blow
to President Ali Abdullah Saleh's efforts to ride out demands
for his immediate exit. []
Unrest spread in southern Syria with hundreds of people
demonstrating against the government in three towns near the
main city of Deraa, although authorities did not use force to
quell the latest protests. []
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Samuel Ciszuk, Senior Middle East & North Africa Energy Analyst
at IHS Energy, will hold a Q+A session in the Global Oil Forum
at 1500 GMT today, looking at the rapidly evolving situation in
Yemen, Libya and Syria and assessing political and economic risk
across the region.
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JAPAN CRISIS
Prices have seesawed over the past week as concerns over
Western military intervention in Libya offset the risk aversion
that swept global financial markets after Japan's worst
earthquake on record, tsunami and resulting nuclear crisis.
Smoke and steam rose from two of the most threatening
reactors at the crippled Fukushima nuclear plant on Tuesday,
suggesting the battle to avert a disastrous meltdown and stop
the spread of radiation was far from over. []
But oil prices gained support as the market realised
hydrocarbons will have to compensate for Japan's loss of nuclear
generation capacity.
"The market has recovered very much after the Japan crisis,
and for investors who had long positions at the period of
declining market, it's good for them to take profit now," said
Ken Hasegawa, commodity derivatives manager at Japan's Newedge
brokerage.
Aalysts expect weekly reports on U.S. oil inventories will
show gasoline and distillate stockpiles fell last week, which
should support product values. []
Industry group the American Petroleum Institute will publish
inventory statistics for the week ended March 18 on Tuesday,
followed by U.S. government data from the Energy Information
Administration on Wednesday.
(Additional reporting by Alejandro Barbajosa, editing by
William Hardy)
