* Rebels regain key oil ports ahead of London Libya talks
* Brent to rise to $125.51 in 3 months-[]
* Coming Up: Weekly U.S. API petroleum stocks; 2030 GMT
(Updates throughout)
By Barbara Lewis
LONDON, March 29 (Reuters) - Oil prices fell around a dollar
on Tuesday in a third day of declines as expectations mounted of
a relatively swift restoration of supplies from OPEC member
Libya.
Opposition forces still faced Libyan leader Muammar
Gaddafi's better armed and organised troops, which on Tuesday
reversed the rebels' western charge. []
Traders and analysts also cautioned it could take time for
significant volumes of Libyan crude make their way to
international markets. []
Brent crude futures for May delivery <LCOc1> fell $1.10 to
$113.70 a barrel by 1217 GMT, adding to two days of losses.
U.S. May crude futures <CLc1> dropped by $1.16 to $102.82
after falling the three previous sessions.
Rebels opposed to the rule of Muammar Gaddafi have regained
control of oil ports and the United States on Monday said sales
of Libyan crude from rebel-held territory would not be subject
to sanctions. []
"The outcome of the looming battle for Sirte will affect how
quickly oil exports from Libya come back online," said Eurasia
Group analyst Cliff Kupchan said in a research note.
"If the rebels take Sirte and move on Tripoli, the timetable
could be somewhat expedited, though again full recovery would
take a significant period of time."
The uncertainty could limit any sell-off, although thin
volumes might exaggerate volatility.
Volume for U.S. crude fell on Monday to the lowest this
year, with trade limited in part, analysts said, by concern
about the prognosis for Japan, the world's third biggest oil
user after the United States and China, following this month's
earthquake and nuclear disaster.
SAUDI CAPCITY
To offset Libyan disruption, Saudi Arabia has increased
output to around 9 million barrels per day (bpd), around one
million bpd more than its OPEC target, which analysts have said
has put a strain on its spare capacity.
As the kingdom scrambled to maintain its 12.5 million bpd
oil capacity, specialist energy bank Simmons & Co said on Monday
Saudi Arabia planned to expand its drilling rig count by 28
percent. []
"It's probably more bullish than bearish," said Amrita Sen,
analyst at Barclays Capital. "The flip side is there is less
spare capacity."
Even though it has increased supplies, some of the extra
Saudi oil has gone into stocks and the kingdom has repeatedly
said the market is well-supplied.
Inventories in the United States have been particularly
ample, which has helped to keep the price of U.S. crude around
$10 below that of European Brent.
Ahead of weekly inventory data for release on Tuesday and
Wednesday, a preliminary Reuters survey of analysts found crude
oil stocks probably rose in the United States last week in line
with seasonal trends. []
Higher imports were expected to meet demand as refiners
bring units back from maintenance, analysts said.
(Additional reporting by Florence Tan, Alejandro Barbajosa,
Randy Fabi; editing by William Hardy)
