NEW YORK (AP) — Oil fell Monday as Libya's Moammar Gadhafi appeared to accept a cease-fire plan with rebel forces, increasing the chances that Libyan crude ill return to world markets soon.
Benchmark West Texas Intermediate crude for May delivery lost $1.04 at $111.75 per barrel in morning trading on the New York Mercantile Exchange. Earlier in the day, crude rose as high as $113.46 per barrel, the highest level since September 2008.
The drop followed news over the weekend that Gadhafi had accepted a "road map" to a cease-fire from a delegation of African leaders. Experts say most of Libya's exports will be shut down for months, until the country sees some political stability. Traders still consider the cease-fire plan a good sign that oil will once again leave the country. Most of Libya's oil went to refineries in Europe.
"A cease-fire could ultimately lead to a stable enough environment that could accommodate at least some oil production" in Libya, analyst Jim Ritterbusch said. Before the rebellion broke out, Libya produced about 1.6 million barrels of oil per day and supplied nearly 2 percent of world demand.
Meanwhile, gasoline pump prices continued to push to the highest levels ever for this time of year. The national average for a gallon of regular rose more than a penny on Monday to $3.77 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of gas costs 21.6 cents more than a month ago and 90.7 cents higher than the same time last year.
Gasoline is already above $4 per gallon in California, Hawaii and Alaska. It's closing in on the $4 mark in Connecticut, Washington, D.C., Illinois and New York.