Oil rises on supply concern, dollar
London, February 18, 2014
Oil rose towards $110 a barrel to its highest in almost seven weeks on Tuesday, supported by a weaker dollar, cold weather in the US and renewed concern about threats to supply in the Middle East and Africa.
Stirring supply worries, Libya's output fell, South Sudanese rebels said they seized control of an oil-producing state capital and expectations of a breakthrough in Iran's nuclear talks with world powers were dampened by both sides.
"Brent is getting a bit of help from the weak dollar and cold weather in the US," said Christopher Bellew, a senior broker at Jefferies Bache in London.
"There was a moment towards the end of last year when there was a bit of improvement in the geopolitical situation on a number of fronts. That seems to have gone into reverse now."
Brent crude was up 39 cents at $109.57 by 1513 GMT and traded up to $109.89, its highest since Jan. 2. US crude was up 94 cents to $101.24 from Friday and reached its highest point since Oct 18. There was no settlement on Monday as U.S. markets were shut for the Presidents Day holiday.
The supply disruptions supported Brent in particular. Libyan production was just 375,000 barrels per day as protests disrupted flows from a large oilfield, El Sharara, the state oil company said on Tuesday. On Sunday, output was 390,000 bpd.
"Even though Libya's ongoing supply shortfalls are mostly priced in by the market, the news that El Sharara flows were partly blocked by protesters following several threats earlier last week still underpinned Brent prices," said Andrey Kryuchenkov, an analyst at VTB Capital in London.
Compounding supply concerns, South Sudanese rebels said they had seized control of the capital of oil-producing Upper Nile state, Malakal, on Tuesday.
South Sudan says it has already been forced to cut oil output by a fifth to 200,000 bpd, all of which is pumped from Upper Nile. Rebel control of Malakal could raise doubts about its ability to maintain the rate of output.
The dollar was trading near a six-week low against a basket of currencies, supporting commodities such as oil that are priced in dollars. - Reuters