Brent steady below $103 despite Libya unrest
SINGAPORE, September 2, 2014
Brent crude held steady below $103 a barrel on Tuesday, with new unrest in Opec oil producer Libya balanced by concerns of slowing oil demand growth due to weak economic recoveries in China and Europe.
Euro zone manufacturing growth slowed slightly more than initially thought in August, while growth in China's factory sector slipped to a three-month low last month, adding to concerns about oil demand.
Brent prices have trended higher since the latter half of August as speculators stepped back into the market, following a drop of nearly $15 to around $101 a barrel over the previous two months.
"Still, the economic recovery in Europe and especially in China is not strong, and we've seen no supply shortages in Iraq," said Ken Hasegawa, a commodity sales manager at Newedge Japan.
"There is no real direction in the market until heating oil demand kicks in closer to winter. We think the decline in oil prices has stopped and it will not go below $100, but upside is also limited at the moment," Hasegawa said.
Brent crude for October delivery was 7 cents higher at $102.86 a barrel at 0328 GMT. The contract had ended the previous session 40 cents lower.
U.S. crude was down 13 cents from Friday's close, at $95.83 a barrel. Trading in the United States was shut on Monday for the Labor Day holiday.
Renewed fighting in Libya could dent hopes of higher crude exports from the Opec member, after the government said it has lost control of most ministries and state institutions located in Tripoli to rival armed groups.
The violence comes as the North African country has raised oil production to 700,000 barrels per day (bpd) from as low as 155,000 bpd in May, although still much below its potential of 1.6 million bpd.
"I don't think Libya will be able to increase output above 700,000 bpd any time soon," Hasegawa of Newedge Japan said.
Iraq's oil exports fell in August to an average of 2.375 million bpd from 2.442 million bpd in the previous month, mainly due to bad weather.
Iraqi exports from its southern ports have largely remained unaffected by fighting in the country. But shipments from the northern oilfields of Kirkuk have been shut since March 2 due to attacks on a pipeline to Turkey, keeping total exports below their potential.
Ukraine reported its forces were under fire from Russian tanks again on Monday, with president Petro Poroshenko accusing Russia on Monday of "direct and undisguised aggression".
The recent escalation of the conflict could prompt the West to impose new tougher sanctions against Russia, the world's biggest oil producer, as well as threaten natural gas supplies to Europe.
Output from Britain's Buzzard oilfield has stopped again after returning from maintenance last week, trading sources said on Monday, as the field endures a stuttering return to full output after summer work on the rig.
Buzzard is the biggest contributor to the Forties oil stream, one of the four benchmark crudes underpinning the price of Brent crude oil futures, and is closely-watched by oil traders. – Reuters