New York-Traded Oil Gains 2% as Brent Declines

Crude oil futures trading in New York overcame early weakness to push toward $84 a barrel Monday, with Europe's Brent oil still in the red as the regime of Libya's Moamar Ghadafi appeared to be in its last moments.

Light, sweet crude for delivery in September added $1.53, or 1.9 percent, to $83.80 a barrel on the New York Mercantile Exchange. The contract traded as low as $81.13 a barrel.

Brent oil, the European benchmark, declined as Libyan rebels gained control of most of the capital, Tripoli, and as world leaders called on Ghadafi to give up the fight.

Sweet oil from Libya mainly fueled refineries in southern Europe, and the six-month conflict had ground the country's 1.3 million barrels a day in oil exports to a halt.

Brent for October delivery lost $1.65, or 1.5 percent, to $106.91 a barrel on ICE Futures in London.

Analysts were quick to point out that it would take a while to restore Libyan output.

"[At] best, it will take over one year for a return to the production levels we saw before hostilities started. Reports of disunity within the Libyan rebel forces ... indicates the transition of power could be rocky," analysts at JBC said in a note to clients. "There also remains considerable scope for Libyan oil production to remain muted in the coming months should Ghadafi forces adopt a scorched-earth approach."

New York-traded oil benefited from a more benign tone for equities and other assets Monday.

Stocks rebounded on Wall Street to start the week with investors hoping for more stimulus for the battered US economy. Federal Reserve chairman Ben Bernanke was set to give a speech Friday, amid a debate and speculation over further monetary easing -- specifically, about any reference to the Fed's third round of quantitative easing (QE3).

"Expectations are high, but those looking for an outright commitment to QE3 are likely to be disappointed," analysts at Societe Generale said. "QE3 may well happen eventually, but the Fed will likely use up more conventional and less controversial tools first."

On Friday, September futures slipped a bit to end with a weekly loss of 3.7 percent, amid raging worries over the European debt crisis and further indications of a weakened US economic outlook.

Meanwhile, the dollar index, which measures the greenback's performance against six major global currencies, declined Monday to 73.892 from 74.008 late Friday. A strong dollar usually tends to weaken commodities that are priced in the currency, including crude.

Energy products declined Monday, with gasoline for September delivery off three cents, or one percent, to $2.81 a gallon.