NEW YORK (CNN/Money) - Oil prices fell nearly 5 percent Thursday, the biggest one-day drop since the start of the war, as Kurdish fighters took control of the oil-rich city of Kirkuk in northern Iraq, easing fears of damage to Iraqi oil fields.
Light crude oil for May delivery fell $1.39, or 4.8 percent, to $27.46 a barrel on the New York Mercantile Exchange. London Brent blend crude oil eased 82 cents to $24.48 a barrel.
U.S.-backed Kurdish fighters took control of Kirkuk, near the northern oil fields. In the South, an advisor to General Tommy Franks told Reuters that the Southern oil fields could be pumping 200,000 to 800,000 barrels-per-day within 15 weeks.
Also weighing on prices was a report from the West's energy watchdog, the International Energy Agency, saying a backlog of extra OPEC crude is poised to reach importing countries in the second quarter, the weakest period for demand.
OPEC, which raised output before the war to prevent a price spike, is now considering whether to cut production quotas or simply seek to eliminate excess supply at a proposed emergency meeting planned for later this month or early in May.
OPEC President Abdullah al-Attiyah said on Thursday several dates were under consideration for the meeting -- April 24, April 28, May 3 and May 7.
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Dealers said that expectations of a flood of oil from OPEC members in the coming weeks, combined with rising production from Nigeria following disruptions caused by ethnic violence, were also weighing on the market.
"Short-term the market is already bearish because OPEC supplies will build stocks. The news from Kirkuk adds to that sentiment," said Geoff Pyne, consultant to Sempra Energy.
Unleaded gasoline price for May delivery settled 4.11 cents lower at 83.46 cents a gallon, while heating oil ended 2.68 cents lower at 71.61 cents a gallon on the New York Mercantile Exchange.
-- from staff and wire reports