Brent oil edges below $125 on Sudan moves
Singapore, March 26, 2012
Brent crude edged below $125 on Monday as a possible resumption in crude production from South Sudan offset supply worries on news of a sizeable drop in Iranian oil exports due to Western sanctions.
Oil supply disruptions from Iran, Syria, South Sudan and Yemen have supported oil prices this year, with Brent rising 16 percent so far this year. South Sudan said on Saturday that it hopes to resolve a row over oil and other outstanding issues with Sudan within a month or two.
Oil rallied on Friday, narrowing its losses last week, on the first sizeable drop in Iranian exports as some buyers stopped or scaled back purchases to avoid Western sanctions aimed at Iran's disputed nuclear program.
Brent crude edged down 29 cents to $124.84 by 0304 GMT after posting a 68-cent weekly loss on Friday, a second straight weekly decline. U.S. crude fell 30 cents to $106.57.
"The geopolitical risk has been overly built into oil prices as we are in a low demand period where inventories are rising," said Tony Nunan, a Tokyo-based risk manager at Mitsubishi Corp.
"Oil has a bias towards the downside in the next one to two months, but most investors are bullish in the medium- to long term so it's hard to sell down."
Money managers cut their net long U.S. crude futures and options positions, in the week to March 20, the U.S. Commodity Futures Trading Commission, said in a report on Friday.
Crude exports from Iran appear to have fallen this month by around 300,000 barrels per day (bpd), or 14 percent, the first sizeable drop in shipments this year, according to estimates from industry consultant Petrologistics and an oil company.
A restart at South Sudan's oil fields will bring output from the two countries back to about 350,000 barrels per day, up from about 50,000 bpd currently.
"It's not a small amount and the oil is needed in Asia," Nunan said, adding that the resumption in supply could keep oil prices from rising in summer. - Reuters