Oil hits 9-month low on ample supply
London, August 12, 2014
Brent crude oil fell below $104 a barrel on Tuesday, its lowest level in nine months as steady supplies dispelled concerns over potential disruptions in producers such as Iraq and Libya.
The International Energy Agency (IEA) said that while the situation in several producer countries was "more at risk than ever", supplies were ample and the Atlantic Basin was even reported to be facing a glut.
Opec output hit a five-month high of 30.44 million barrels per day (bpd) in July with a rise of 300,000 bpd led by Saudi Arabia and Libya, the IEA said.
"In terms of the physical side of things, particularly for Brent, there are pretty high inventories at the Atlantic Basin at the moment and that's holding back gains," said Ankit Pahuja, a commodity strategist at investment bank ANZ.
September Brent crude was down 94 cents at $103.74 per barrel by 1349 GMT after touching $103.35, its lowest level since November 2013. The contract closed on Monday at $104.68, off 34 cents.
US crude was trading down 79 cents to $97.29 a barrel.
Brent is down about 10 percent from a June peak of $115 per barrel despite concerns over supply disruptions.
Production in Iraqi Kurdistan remains largely unaffected and July exports from the south of Iraq held at near record levels of around 2.5 million bpd.
In Libya, despite clashes between armed factions in Tripoli and Benghazi, output remains around 450,000 bpd, a National Oil Company spokesman said on Monday.
The IEA said Libya's output rose by 190,000 bpd in July to 430,000 bpd.
Sanctions placed on Russia by the United States and European Union over the crisis in Ukraine have also failed to impact oil markets for now.
"Shortterm supply disruptions do not seem on the cards, while on the other hand the sanctions (which are not limited to the oil sector) are expected to trim Russian demand," the IEA said.
A Russian convoy carrying food, water and other aid set off for eastern Ukraine on Tuesday, but Kiev said it would not allow the vehicles to enter the country.
Oil markets awaited weekly US oil stocks data, due to be published later on Tuesday and on Wednesday.
US commercial crude oil stocks were forecast to have fallen 2.2 million barrels in the week to August 8, a preliminary Reuters survey of six analysts showed on Monday. - Reuters