Oil steadies near $98

NEW YORK (CNNMoney) — Oil prices have backed off recent highs and were holding below $98 a barrel early Friday, as investors watched the changing political dynamic across North Africa and the Middle East.

The U.S. benchmark oil contract, West Texas Intermediate, for April delivery was up 42 cents to $97.70 a barrel. Prices hit a high above $103 on Thursday, before retreating to settle 82 cents lower at $97.28 a barrel.

Brent crude, the European standard, added 73 cents to $112.09 a barrel on Friday.

The relatively subdued action in the oil market comes near the end of a volatile week. On Wednesday, prices jumped above $100 a barrel for the first time since October 2008, as the political revolt in Libya hit the nation’s oil exports.

Traders said the market appears to have “priced in” the situation in Libya, where opponents of Moammar Gadhafi’s decades-old rule have taken control of several major cities outside of the capital, Tripoli.

“Crude oil prices are expected to trade in a lower direction in today’s session,” said Tom Pawlicki, an analyst at MF Global, in a research report. “We think that production outages in Libya are approaching the point of being fully discounted.”

The International Energy Agency said Thursday that the unrest has removed an estimated 500,000 to 750,000 barrels per day of crude oil — or less than 1% of global daily consumption — from the world market.

Libya produced 1.6 million barrels per day of crude last year, making it Africa’s third-largest exporter. The North African country claims the continent’s largest reserves and has a particularly valuable type of light, sweet crude.

But exports from Libya make up a fraction of the oil consumed worldwide, and larger exporters, such as Saudi Arabia, have pledged to pump more oil to make up for any shortages related to the unrest there.

In addition, oil supplies remain relatively high in many parts of the world, including the United States. 

First Published: February 25, 2011: 6:49 AM ET