NEW YORK (AP) - Oil fell Monday after Libya's Moammar Gadhafi appeared to accept a cease-fire plan with rebel forces, increasing the chances that Libyan crude will return to world markets soon. Crude prices were also pushed down as Goldman Sachs warned that consumers in the U.S. are starting to conserve energy in the face of high oil prices.
Benchmark West Texas Intermediate crude for May delivery lost $2.87 to settle at $109.92 per barrel 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. Although rebel leaders later rejected the truce proposal because it did not include Gadhafi stepping down, traders considered the cease-fire move a sign that oil exports will start again once the fighting stops.
Goldman Sachs analyst Jeffrey Currie recommended that investors stop buying a specific oil contract that the investment bank had previously recommended. Currie said the U.S. appears to have started cutting oil consumption as consumers face higher prices for gasoline and other petroleum-based fuels. Currie focused on the oil contract for December delivery, but investors will likely take that as a general recommendation to sell, analyst Stephen Schork said. Goldman Sachs is a major player in oil markets and it has been one of the most vocal about the potential for oil to rise this year, Schork said.
Meanwhile, gasoline pump prices continued to rise 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.