Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Oil stabilizes after 'gut reaction' to bin Laden death

oil settle.top.pngClick chart for more commodities action. By Blake Ellis, staff reporter

NEW YORK (CNNMoney) -- Oil prices erased early losses Monday, ending the session only slightly lower, as the knee-jerk optimism triggered by Osama bin Laden's death began to fade.

President Barack Obama announced late Sunday that U.S. forces had killed al-Qaeda leader Osama bin Laden, and officials said early Monday that bin Laden's body has been buried at sea.

Gasoline prices and taxes by state
Prices at the pump can vary widely among states due to a number of factors. More

As investors breathed a sigh of relief following the news, oil prices fell 2% in early trading.

But most of those declines were erased by the end of the day, with crude for June delivery edging down 41 cents, or 0.4%, to settle at $113.52 a barrel -- after rising slightly in midday trading.

National security concerns and terrorist threats typically lead to higher commodity prices, as investors duck out of the stock market. Oil prices had risen recently as investors worried about potential supply disruptions -- with prices spiking during the past month as violence in Libya continues to escalate.

But Monday's initial sell-off in reaction to bin Laden's death was overdone, said James Williams, an energy economist at the oil and gas consultancy WTRG Economics.

"It's very difficult to see how this event will fundamentally change supply or demand for crude oil," said Williams. "This seems like a gut reaction to what the West views as a happy event. A lot of times we see markets move on happy news that in reality has nothing to do with the market, and I think this is one of them."

In fact, Williams said the death of bin Laden could lead to more violence in the short-term as his followers seek retribution.

"And more violence in the Middle East probably means less oil," he said.

But if the death of bin Laden leads Obama to end the war in Afghanistan sooner, oil prices would likely trend lower.

"Any country in the Middle East, North Africa or even western Asia that goes from war to peace is definitely bearish for oil, because the more peace there is in the region, the less risk premium there is for oil," said Williams.

Meanwhile, U.S. gas prices continued to head higher. Motorist group AAA reported Monday that the national average price for a gallon of regular unleaded gasoline rose 0.9 cents to $3.952. Gas prices have jumped 11% over the past 41 days.

In other commodities, gold, which is typically seen as a safe haven during times of uncertainty, already recovered initial losses. After dipping in overnight trading on the news of bin Laden's death, gold futures for June delivery rose 70 cents to settle at $1,557.10 an ounce. Earlier in the session, gold hit an intraday high of $1,577.40 an ounce.

Silver prices sold off sharply, dropping 5% after some early heavy selling. According to news reports, there had been one big sell order that triggered the drop.

The U.S. dollar managed to gain some ground against the yen but remained weak versus the euro, at $1.48. To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.92%3.92%
15 yr fixed2.99%2.98%
5/1 ARM3.26%3.12%
30 yr refi4.01%3.98%
15 yr refi3.08%3.04%
Rate data provided
by Bankrate.com
View rates in your area
Find personalized rates:
Index Last Change % Change
Dow 17,798.49 -14.90 -0.08%
Nasdaq 5,127.53 11.38 0.22%
S&P 500 2,090.11 1.24 0.06%
Treasuries 2.22 -0.01 -0.31%
Data as of 10:26am ET
Company Price Change % Change
General Electric Co 30.36 0.00 0.00%
Bank of America Corp... 17.48 0.04 0.23%
HP Inc 12.61 -0.03 -0.24%
Pfizer Inc 32.79 -0.08 -0.24%
Walt Disney Co 115.13 -3.54 -2.98%
Data as of Nov 27


Sumner Redstone, the media mogul who controls Viacom and CBS, is at the center of a legal dispute. One side says he is practically unable to make decisions for himself. The other says he is "engaged and attentive." More

Gold futures hit a low of $1,051.60 an ounce, yet another reminder of just how out of favor gold has become since its all-time high of nearly $1,890 in 2011. More

Watsi crowdfunds donations to cover healthcare costs of those in need. And it's seeing a surprising trend: micro-donations via the popular Chinese social networking app, WeChat. More

Hive, a startup funded by the UN, is tasked with getting more Americans engaged with the refugee crisis. More

Facebook just increased the amount of paid time off new dads working at its international offices can take. More