Trading on Success of Libyan Rebels (SCO, USO, OIL)

Oil prices fell during trading in Asia on Monday, as rebel advances in Libya led to the recapture of the two important oil towns of Brega and Ras Lanuf. The United Nations Security Council approved a no-fly zone that is being enforced by Western air and sea power, which has allowed the Libyan rebel forces to turn the tide in a battle that was beginning to go badly for them. After their initial successes, the rebels faced a series of setbacks as the better equipped forces of Libyan leader Colonel Muammar Gaddafi struck back at the rebels. The air support that Gaddafi's forces enjoyed played a vital role in his regime's counterattacks against rebel forces. Shortly after the no-fly zone was announced, the Libyan leader announced a cease-fire. However, sources in Libya reported that his forces actually stepped up their attacks in an effort to gain as much ground as possible before they grounded their air support or any foreign intervention could take place. Western forces responded by attacking Gaddafi's air defenses, as well as tanks that were taking part in offensives against rebel-held positions. Although the Western powers say that their mission is to protect the Libyan people and that they are not taking sides or pushing for the ouster of Gaddafi, there can be little doubt that the rebels are enjoying the protection of Western powers and that their recent gains would not have been possible without the current air support that they are operating under. This has led to hopes that the regime of Libyan leader Colonel Muammar Gaddafi may come to an end soon. If the eccentric Libyan leader is ousted and oil production is able to return to previous levels in the near future, there should be less near and long term upward pressure on oil prices. Continued success from the rebels and an end to Gaddafi's regime should make an investment like the ProShares UltraShort DJ-UBS Crude Oil

climb higher. On the other hand, if the situation in Libya drags on or the unrest that has spread throughout the Middle East and North Africa worsens, the iPath S&P GSCI Crude Oil Total Return Index ETN

and the United States Oil Fund

should see their share prices rise.