Oil near $85 as traders eye Libya, Bernanke speech

SINGAPORE (AP) - Oil prices hovered near $85 a barrel Thursday in Asia as traders eyed fighting in Libya and an upcoming speech by Federal Reserve Chairman Ben Bernanke.

Benchmark oil for October delivery was down 2 cents to $85.14 at midday Singapore time in electronic trading on the New York Mercantile Exchange. Crude lost 28 cents to settle at $85.16 on Wednesday.

In London, Brent crude for October delivery was up 24 cents to $110.39 on the ICE Futures exchange.

After taking control of most of Libya's capital Tripoli earlier this week, rebels continued to meet sporadic resistance from supporters of Moammar Gadhafi. Rebel leaders were beginning to set up a new government in Tripoli although Gadhafi's whereabouts were still unknown.

Analysts are split about how fast Libya's oil production could return to its prewar levels of about 1.5 million barrels a day from its current 60,000. Some expect output to fully recover by next year while others worry political instability and damaged infrastructure could stymie the oil industry for several years.

"We don't expect any significant sudden rush of Libyan exports sufficient to affect the global oil market significantly," Barclays Capital said. "It would be naive to expect a full resumption of Libyan output next year."

"The road to full recovery is likely to be long, winding and, until a minimum level of nation building is achieved, almost interminable," the banks said.

Investors are also trying to anticipate what Bernanke may say in a speech Friday from Jackson Hole, Wyoming. Speculation that Bernanke may announce monetary stimulus measures has helped boost U.S. stocks so far this week

In other Nymex trading for October contracts, heating oil rose 0.4 cents at $2.97 per gallon and gasoline futures added 0.3 cent to $2.76 per gallon. Natural gas for September delivery fell 0.9 cents to $3.91 per 1,000 cubic feet.