* African Union: Gaddafi accepts roadmap to end civil war
* Gaddafi forces continue shelling of Misrata []
* Yemen's Saleh accepts Gulf plan, opposition rejects it
(Updates prices)
By Claire Milhench
LONDON, April 11 (Reuters) - Brent crude oil retreated on
Monday below $126 and U.S. crude futures slipped as the African
Union signalled progress in Libyan peace talks yet government
forces continued their bombardment of Misrata.
At 1337 GMT, ICE Brent crude for May <LCOc1> was down 70
cents to $125.95 a barrel after hitting an intraday low of
$124.69 a barrel, down almost $2.
U.S. crude for May delivery <CLc1> was down by 53 cents to
$112.26 a barrel after earlier slipping to $111.53.
The African Union said Libyan leader Muammar Gaddafi had
accepted a roadmap to end the civil war in Libya, including an
immediate ceasefire, but forces loyal to Gaddafi continued to
shell the besieged town of Misrata. []
A NATO official said the alliance would target Gaddafi's
forces as long as they threatened civilians. []
"It does not appear that this indication of a peace deal has
any substance at this point," the official said.
An oil broker said the market was also selling off due to
profit-taking. "The market looked very toppy indeed -- on Friday
the market was 90 percent 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."
Even if an end to the civil war is in sight, it will be some
time before Libyan exports return to pre-conflict levels.
"Some of Libya's oil fields, which have recently come under
attack, have suffered severe damage, which is likely to have a
long-lasting negative impact on the country's production
profile," said Amrita Sen at Barclays Capital.
"We don't believe there is reason to be optimistic even if
Gaddafi were to step down, as the power vacuum would be very
large."
The conflict in Libya has cut the country's 1.6 million
barrels per day oil output by around 80 percent, 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, its 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."
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More on Middle East unrest: [] []
Libya Graphics http://link.reuters.com/neg68r
Interactive graphic http://link.reuters.com/puk87r
Reuters Insider Special - Doomsday Scenarios for Oil:
http://link.reuters.com/ner88r
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MIDDLE EAST UNREST
Unrest in other parts of Africa and the Middle East is still
a key concern for investors worried about supply disruption.
In Syria, security forces sealed off the coastal city of
Banias overnight following pro-democracy protests and killings
by irregulars loyal to Syrian President Bashar al-Assad,
witnesses said. []
Yemen's opposition has rejected a Gulf Arab initiative for
President Ali Abdullah Saleh to step down because it appears to
offer him immunity from prosecution, while Saleh welcomed it.
[]
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. []
(Additional reporting by Florence Tan in Singapore; editing by
Jason Neely)
