* Osama Bin Laden is dead, body recovered-U.S. officials
* U.S. crude off 31-month peak, Brent below $125
* Silver plunges 10 pct, gold drops from record
(Recasts with Bin Laden, adds quotes)
By Alejandro Barbajosa
SINGAPORE, May 2 (Reuters) - Oil prices fell by more than a
dollar on Monday on reports that al-Qaeda leader Osama Bin Laden
is dead.
U.S. President Barack Obama was to make the announcement
shortly in a hastily called, late-night appearance at the White
House, after two officials said Bin Laden's body has been
recovered. []
ICE Brent crude for June <LCOc1> fell $1.08 to $124.81 a
barrel, still within $3 of last month's 32-month high above
$127, while U.S. crude <CLc1> slid $1.61 to $112.28 at 0318 GMT.
"Al-Qaeda is still a threat and it's independent from Bin
Laden, but I think to the extent that he has been an important
rallying point for that ideology, it's a positive," said Jeremy
Friesen, commodity strategist at Societe Generale.
Oil was already down before the news about Bin Laden, after
NATO air strikes over the weekend killed one of Libyan leader
Muammar Gaddafi's sons and after industry sources said that
Saudi Arabia raised output in April.
Gaddafi's youngest son and three grandchildren were killed
in a NATO air strike, the Libyan government said on Sunday.
Britain said that while it was not targeting the leader, it was
homing in on the regime's military machine. []
"What's happening in Libya is probably an event that will
see Gaddafi moved out of his position, so the risk premium which
relates to Middle East concerns will start to erode," said
Jonathan Barratt, managing director at Commodity Broking
Services in Sydney, estimating that premium at about $18.
Saudi Arabia's crude oil output edged back up in April to
around 8.5 million barrels per day (bpd) from roughly 8.3
million bpd in March as demand picked up, Saudi-based industry
sources said on Sunday. []
"Saudi Arabia has increased production, we know that the
dollar is slightly better bid and you have big movements in the
precious metals markets," Barratt said.
The dollar strengthened by nearly 0.3 percent earlier on
Monday following last week's slide, deterring investors from
piling into commodities this week and triggering a 10 percent
plunge in spot silver prices.
Last week's Federal Reserve reassurance that economic
stimulus would continue boosted U.S. crude to above $114 on
Friday, the highest since September 2008, and gold to a record
earlier on Monday.
Money managers increased their bets on higher U.S. crude oil
prices to a combined record level in New York and London in the
week to April 26, data from the CFTC showed on Friday, as U.S.
prices rose to their highest level since September 2008.
[]
On the New York Mercantile Exchange alone, net-long crude
futures and options positions rose by 11,202 to 301,118, the
Commodity Futures Trading Commission said on Friday, just shy of
an all-time high of 311,632 reached in March. []
MIDEAST UNREST
Libyan government spokesman Mussa Ibrahim said Gaddafi was
unharmed and in good health despite what he called "a direct
operation to assassinate the leader of this country" following
Sunday's NATO air strikes.
The British and Italian embassies in Tripoli were attacked
after Gaddafi loyalists were shown on Libyan television vowing
vengeance following the air strike.
A deal to remove Yemeni President Ali Abdullah Saleh looked
doomed on Sunday after he refused to sign, raising the threat of
more instability in the Arab state. []
Security forces arrested hundreds of pro-democracy
sympathisers in cities across Syria after taking control of the
city of Deraa, cradle of the uprising against President Bashar
al-Assad's autocratic rule. []
Volatility and uncertainty due to the pan-Arab protests and
Libya's conflict have tempered oil trading. The U.S. 30-day
average volume was down by nearly 130,000 lots compared with the
250-day average at the end of last week, Reuters data showed.
A holiday in parts of Asia, Europe and Latin America on
Monday was also set to stifle trade.
(Editing by Michael Urquhart)
