Brent crude oil fell over $1 on Monday to dip below $125 and U.S. crude futures slipped to below $112 on prospects of a Libyan peace agreement, and giving back some ground after Friday’s strong rally.

At 1027 GMT, ICE Brent crude for May was down $1,62 to $125,03 a barrel after earlier dipping to an intraday low of $124,69 a barrel, down almost $2 on the day.
U.S. crude for May delivery was also down over $1 to $111,71 a barrel after earlier slipping to $111,53.
The African Union said Muammar Gaddafi had accepted a roadmap to end the civil war in Libya, including an immediate ceasefire, but an opposition representative said it would only work if Gaddafi left power.
An oil broker said the market was also partly selling off due to profit-taking. ""The market looked very toppy indeed — on Friday the market was 90% overbought on crude and I feel that needs to unwind a bit, which it is doing.""
Analysts are sceptical about the Libyan peace deal.
Commerzbank’s Carsten Fritsch said: ""We have seen such peace plans before...Unless Gaddafi steps down I think there is little room for discussion from the rebel side.""
A NATO official said Libyan government forces had shelled the Libyan city of Misrata on Monday morning. ""It does not appear that this indication of a peace deal has any substance at this point,"" the official said.
NATO said it would target Gaddafi’s forces as long as they continue to threaten civilians.
Thorbjorn Bak Jensen, an oil analyst at Global Risk Management, added even if an end to the conflict was near, he expected damage to oil installations would hamper exports.
The conflict in Libya has cut the country’s 1,6 million barrels per day oil output by around 80%, with much more of an impact on Brent prices than U.S. crude.
Brent surged over $4 on Friday to settle above $126 a barrel, the highest level in 32 months, as commodities rallied due to a weaker dollar and continued fighting in Libya.
""Oil prices have now reached levels that are no longer justified,"" said Commerzbank’s Fritsch. ""It is largely being driven by fear at present and not by actual supply bottlenecks.""
Only if another oil producer of Libya’s size drops out of the market will spare capacities sink to a critical level, Fritsch said.
He pointed to Saudi comments at the weekend that it stood ready to produce 12,5 million bpd if needed. ""So there is still a lot of spare capacity available.""
----------Middle East unrest
Unrest in other parts of Africa and the Middle East that could disrupt oil supplies is still a key concern for investors.
Yemen’s President Ali Abdullah Saleh welcomed a Gulf Arab mediation plan that would see him hand power to his vice-president and create a new opposition-led government, a statement from his office said.
But Yemen’s opposition coalition has rejected the Persian Gulf Arab plan because it guarantees Saleh immunity from prosecution.
The energy markets are also following the progress of elections in Africa’s most populous nation Nigeria, which produces 1,9 million barrels of oil per day.
(Source: businessday.co.za)