Al-Qaeda leader Bin Laden 'dead'. Again.

[Jan Klimkowski]

Insiders with advance knowledge could have made a lot of money:

Oil drops sharply after bin Laden death

LONDON | Mon May 2, 2011 12:36pm BST

LONDON (Reuters) - Oil prices fell more than 3 percent on Monday after U.S. forces killed al-Qaeda leader Osama bin Laden following a decade of military operations across central Asia and the Middle East.

Brent crude futures for June fell $4.22 to a low of $121.67 a barrel before rallying to $123.65 by 12:10 p.m. Last month Brent hit a 32-month high above $127.

U.S. crude slid $1.90 to $112.03.

European futures trading volume was depressed by a public holiday in Britain and several other countries, which may have added to price volatility, oil brokers said.

News of bin Laden's death raised expectations that the risk of attacks by Islamic radicals could decline and tension in the Middle East could ease, bringing lower oil prices.

But analysts said most of the risk premium attached to oil prices was based on the war in Libya, wider unrest in the Middle East and North Africa, as well as increasing global oil demand.

"The fall in price should be short-lived," said Carsten Fritsch, commodity analyst at Commerzbank in Frankfurt.

"Talk that the risk premium should ease due to bin Laden's death is premature. The risk premium is high because of the war in Libya and ongoing unrest in the Middle East, and that is unlikely to change," he added.

"TEMPORARY"

Economists including David Cohen from Action Economics warned that in the near term Bin Laden's killing might trigger a violent response by al Qaeda, but analysts said it was unlikely the network would succeed in disrupting oil supplies.

The closest al Qaeda has been to hitting the oil industry was on February 24, 2006, when Saudi forces repelled a suicide attack on the Abqaiq oil-processing centre, the world's largest.

The U.S. Department of Homeland Security and the FBI have not issued any warning of a credible or imminent threat, but Obama warned Americans to remain vigilant.

Thorbjrn Bak Jensen of Global Risk Management also suggested the initial sell-off was unlikely to last.

"We regard the reactions as temporary, as nothing fundamentally new is really on the table. If anything, it might be a good idea to secure oil costs," he said.

The killing of Libyan leader Muammar Gaddafi's son in a NATO air strike over the weekend also boosted hopes of a swifter end to the civil war and normalisation of oil production sooner rather than later, analysts said.

Saudi Arabia's crude oil output edged back up in April to around 8.5 million barrels per day (bpd) from roughly 8.3 million bpd in March as demand picked up, Saudi-based industry sources said on Sunday.

The dollar strengthened slightly on Monday following last week's slide, deterring investors from piling into commodities this week and triggering a 10 percent plunge in spot silver prices.

Money managers increased their bets on higher U.S. crude oil prices to a combined record level in New York and London in the week to April 26, data from the CFTC showed on Friday, as U.S. prices rose to their highest level since September 2008.

Volatility and uncertainty due to the pan-Arab protests and Libya's conflict have tempered oil trading. The U.S. 30-day average volume was down by nearly 130,000 lots compared with the 250-day average at the end of last week, Reuters data showed.

Additional reporting by Alejandro Barbajosa, editing by Jane Baird

http://uk.reuters.com/article/2011/05/02...Y820110502