Oil prices eased after rising disruptions in Libya and Middle East tensions By Reuters

By Colleen Howe

BEIJING (Reuters) – Oil prices halted recent gains, falling in Asian trade on Tuesday after rising more than 7 percent in the past three sessions on supply concerns fueled by fears of a wider conflict in the East Means also the closure of the Libyan oil fields.

Futures were down 32 cents, or 0.39 percent, at $81.11 a barrel by 0154 GMT, while U.S. West Texas Intermediate crude futures were down 36 cents, or 0. 46%, at $77.06 per barrel.

Oil markets retreated slightly after steep gains in the past three sessions, driven by expectations of US interest rate cuts that could boost fuel demand, military attacks between Israel and Hezbollah in Lebanon over the weekend that threaten a wider Middle East conflict which could disrupt supply from the key producing region and shutdowns in Libya.

During that period, WTI gained 7.6% and Brent gained 7%.

“Markets remain on edge as fighting between Israel and Hezbollah intensifies,” ANZ analysts said in a note. “The risk of disruption to oil barrels became real after Libya’s eastern government said it would halt all oil production and exports as the political conflict deepened.”

That political dispute could affect as much as 1.17 million barrels a day of output from the North African country, based on data from the latest Reuters survey of production by the Organization of the Petroleum Exporting Countries in July.

Oil was also supported by the escalating conflict between Israel and Hezbollah, with a major exchange of missiles between them as Hezbollah seeks to retaliate for the killing of a top commander last month.

A top US general said on Monday that the danger of a more extensive one had diminished somewhat, but that a potential strike by Iran on Israel remained a risk.