Oil falls below $98 a barrel; stocks pare losses

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U.S. crude oil prices tumbled from their highs Thursday as some speculators apparently backed off from bets that Middle East unrest would worsen.

The market also may have been calmed after Saudi Arabian officials reiterated their intent to replace any crude supplies lost because of production cutbacks in strife-torn Libya.

Near-term oil futures in New York ended floor trading at $97.28 a barrel, down 82 cents from $98.10 on Wednesday and down from an intraday high Thursday of $103.41.

The price continued to decline in electronic trading, to $96.92 a barrel at about noon PST.

Oil’s price in London also fell sharply from its highs. So-called Brent crude reached $119.79 a barrel early in the session but was trading recently at about $111.

The U.S. stock market, which slid for much of Thursday’s session, recouped most of its losses by about noon, with an hour of trading left to go.

The Dow Jones industrial average was off 46 points to 12,059, after earlier losing as much as 122 points. The Dow had plunged 178 points on Tuesday and 107 points on Wednesday.

Besides the Saudi pledge on production, the International Energy Agency said it stood ready to release emergency supplies if necessary.

There also were rumors at one point that Libyan strongman Moammar Kadafi had been shot.

U.S. oil prices still are up more than $10 a barrel from just a week ago, before Libya’s popular revolt escalated.

Commodity analysts said Thursday’s slide in oil reflected speculators’ nervousness about any developments in the Middle East that could send the price tumbling.

Stephen Platt, an analyst at Archer Financial Services in Chicago, said that ‘all you need is for people to get some inclination that they ought to pull back’ to trigger a wave of selling.

-- Tom Petruno

Caption: A trader watches his screen on the floor of the New York Stock Exchange today. Credit: Brendan McDermid / Reuters