SINGAPORE – Oil prices eased off 2½ year highs to below $113 a barrel Monday after President Barack Obama announced that al-Qaida leader Osama bin Laden had been killed.
Benchmark crude for June delivery was down $1.56 at $112.37 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange.
The contract rose $1.07 to settle at $113.93 on Friday and reached $114.18 during in the session, the highest since September 2008.
In London, Brent crude for June delivery was down $1.43 to $124.46 a barrel on the ICE Futures exchange.
Obama said bin Laden was killed Sunday by American special forces in Pakistan. Traders said the death of bin Laden could weaken al-Qaida's ability to carry out attacks and destabilize the oil-rich Middle East.
However, al-Qaida operatives could also seek revenge for their leader's death, and political uprisings this year throughout the Middle East and North Africa that have threatened to disrupt crude supplies were not related to al-Qaida.
"The sentiment is that now that he's dead, al-Qaida will lose a bit of its impact and some of that terror premium will come out of pricing," said Gerard Rigby, an analyst with Fuel First Consulting in Sydney. "There's also some profit-taking going on as we wait to see what the impact of this news is."
Bin Laden, the elusive mastermind behind the devastating Sept. 11, 2001, terror attacks that led the United States into war in Afghanistan and later Iraq, was slain in his luxury hide-out in Pakistan in a firefight with U.S. forces, Obama said Sunday.
Bin Laden's death at a compound in Pakistan ended the world's most widely watched manhunt, and jubilant crowds gathered outside the White House and at ground zero in New York, where the twin towers were brought down by bin Laden's hijackers 10 years ago.
Investors will also be eyeing the latest U.S. unemployment numbers from April later this week for signs the job market is still improving. A big increase in new jobs could helped extend a 33 percent rally since mid-February.
"You get the feeling the U.S. economy is really turning around now," Rigby said. "Higher prices still haven't dented demand."
Trading volume was light in Asia as markets in China, Hong Kong, Taiwan, Malaysia and Singapore will closed for international Labor Day. Markets in Japan were open Monday but will be closed the next three days for Golden Week holiday.
In other Nymex trading in May contracts, heating oil fell 2.7 cents to $3.25 a gallon and gasoline dropped 2.3 cents to $3.38 a gallon. Natural gas June futures were down 0.5 cent at $4.69 per 1,000 cubic feet.