Crude oil futures fell for the first time in three days on Tuesday amid media reports that Libyan president Muammar Gaddafi has offered to step down from his position.
Crude fell as much as 2% today after Kuwaits oil minister said that OPEC members are holding informal discussions about output levels.
Oil for April delivery on the New York Mercantile Exchange fell as much as $2.11 to $103.33 a barrel and was at $105.14 at 10:21 a.m. London time.
Oil prices have risen more than 20% in the past month.
Brent crude for April settlement was at $115.11 a barrel, up 7 cents, after falling as much as $2.25 to $112.79 on the ICE Futures Europe exchange in London.
Gaddafi has hinted that he is ready to quit Libya after being in power for four decades, provided the rebel interim council gives him cash, a safe passage out of the country and assures immunity from criminal prosecution, media reports said.
Reports also said that key members of OPEC, including Saudi Arabia, Kuwait, UAE and Nigeria, are lifting oil output to reign in spiraling oil prices.
Some OPEC members and producers outside the group have made up for the reduction in crude shipments from Libya, Qatari Energy Minister Mohammed Saleh al Sada said today.
OPEC members are holding informal discussions on raising output and haven't yet reached a decision, Kuwaits oil minister said.
We are in consultations but not yet decided which direction to go, Sheikh Ahmad al-Abdullah al-Sabah told reporters in Kuwait City today.
Kuwait is still producing its quotas, he said. "We did not increase," he added.
Any production increase by key OPEc members would make up the shortfall in supplies out of Libya, which is currently wracked by a civil war.
The groups next formal meeting is scheduled for June 8 in Vienna.