Brent set for highest weekly close in 2014
London, February 22, 2014
Brent crude oil slipped towards $110 a barrel on Friday but remained on course for its highest weekly close this year, as supply disruptions in Africa have tightened the market.
Domestic conflicts in Libya and South Sudan, as well as escalating protests in Venezuela have helped support spot oil prices at a time when winter heating demand in the northern hemisphere is close to its peak.
Brent crude futures for April were down 5 cents at $110.25 a barrel by 1445 GMT, having hit a seven-week high of $110.82 on Wednesday. Their low on Friday was $109.90.
U.S. crude futures for April delivery dropped 20 cents to $102.55.
Brent's premium to U.S. crude narrowed to as little as $7.09 in the previous session, its tightest since Oct. 9, and was around $7.50 a barrel on Friday.
U.S. benchmark West Texas Intermediate (WTI) was heading for its sixth straight weekly rise as a new pipeline helps drain supplies from WTI's delivery point at Cushing, Oklahoma.
But prices faced some pressure on signs Iran substantially increased crude oil exports to China and India in January, though total exports from the Islamic Republic remain constrained by Western sanctions.
The United Nations nuclear watchdog also reported on Thursday that Iran's most contested uranium stockpile has declined significantly following a landmark nuclear deal with world powers in November.
Data from the U.S. Energy Information Administration on Thursday was mixed for oil as Cushing crude stocks fell 1.73 million barrels in the week to Feb. 14, while the country's overall crude inventories rose almost 1 million barrels.
"The market is very focused on Cushing, but stocks are flowing to the Gulf Coast where they're starting to build up," said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London.
Crude stockpiles in Cushing have fallen below the five-year average, but the recent rate of inventory declines was unlikely to be sustained due to a rise in domestic production, Tchilinguirian said. Seasonal refinery maintenance in March and April will also reduce demand, he added.
A weaker U.S. dollar, which fell to a seven-week low against the euro earlier this week, has boosted demand for dollar-denominated commodities as they become more affordable to holders of other currencies.
Crude oil supplies from several countries face constraints.
South Sudan's oil output has fallen by about a third to around 170,000 barrels per day (bpd), as the capital of the main oil-producing region has been divided by the army and rebel fighters.
Maintenance at Angola's Plutonio oilfield in March will also cut supply by about 180,000 bpd.
Libya's oil output is just less than a quarter of its pre-Arab Spring levels, languishing below 400,000 bpd. -Reuters