Brent Dips Below $111 on Signs of Rising Supply

Source: Reuters 7/4/2014, Location: Middle East

Oil dipped with Brent futures dropping below $111 a barrel on the prospect of revived Libyan exports and more U.S. crude soon finding its way to refiners, but losses were tempered by economic data pointing to a stronger demand outlook.

Brent crude fell 36 cents to settle at $110.64 a barrel, losing more than 2 percent this week.

U.S. oil lost 29 cents to $103.77 a barrel and was set to end the week down 1.9 percent after seven straight days of losses. Trade was extremely thin due to the Fourth of July holiday in the United States.

"We have been in a corrective phase for oil prices over the past three sessions as the market comes to acknowledge that we have no disruption in southern Iraqi oil production or exports," said Harry Tchilinguirian, head of commodity market strategy at BNP Paribas in London.

"We are seeing relative weakness in Brent compared to WTI since yesterday due to the news of the possible return of oil terminals in Libya to government control."

The WTI-Brent CL-LCo1=R spread has tightened by about $1 to $6.94 a barrel in the last week.

In the United States, the near-completion of the Seaway pipeline means an extra 450,000 barrels per day (bpd) of shale oil will soon be sent to U.S. Gulf Coast refiners, further reducing their need of foreign oil, a bearish signal for the market.

The reopening of Libya's eastern Es Sider and Ras Lanuf terminals will add around 500,000 bpd of oil exports to markets after the end of a deadlock with local leaders that had cut exports from the OPEC member to a trickle.

"The market is kind of balanced at the moment with negative and positive news balancing each other," said Eugen Weinberg, analyst at Commerzbank in Frankfurt. "We have geopolitical tensions in the Ukraine, Middle East and positive (factors) with Enterprise finishing the Seaway loop ... and Libyan port reopenings." The prospect of rising Iranian exports should sanctions ease remained a factor for oil markets, with investors sensitive to signs of progress in talks to end a dispute over Tehran's nuclear program.

Iran has reduced demands for the size of its future nuclear enrichment program although the West is urging Tehran to compromise further.

On the demand front, data on Thursday showed U.S. employment growth jumped in June and the jobless rate closed in on a six-year low, evidence the economy was growing briskly heading into the second half of the year.

The signs of growth from the United States closely followed data from China that showed factory activity there hit multimonth highs in June, adding to sentiment that demand for oil would remain solid.

World stock markets were enjoying the view from record highs on Friday, lifted by a strong week of U.S. economic data and promises from the European Central Bank that cheap money will be sloshing around for years.

But investors were still nervous about the unfolding crisis in OPEC's second-largest producer, Iraq.

Its autonomous Kurdish region has hit back at Baghdad over independent oil exports, with the Kurdistan Regional Government threatening in a letter to countersue the central government for trying to block its sales.

Also, militants from the Islamic State group seized Syria's largest oil field from rival Islamist fighters on Thursday, strengthening their advance across the eastern Deir al-Zor province, an opposition monitoring group said.

However, the change in control of the field should have little impact on global oil markets. Syria is not a significant producer and has not exported any oil since late 2011.

Australia >>  6/30/2022 -  Oil lifting commencing today with record revenues anticipated
Seismic and well testing operations delayed
Battmin drilling program t...

Brazil >>  6/17/2022 - Petrobras, regarding the news published in the media, clarifies that by request of the Chairman of the Board of Directors, its Board of Directors held...

Canada >>  6/16/2022 - PetroTal Corp. is pleased to announce the following sales related update.

720,000 barrels of oil under contract for export from Bayovar. Ap...

United States >>  6/15/2022 - ExxonMobil released the following statement in response to a letter from President Biden.

We have been in regular contact with the adminis...

Related Categories: Coal  Electricity  General  Natural Gas  Oil 

Related Articles: Coal  Electricity  General  Natural Gas  Oil 

Gulf Oil and Gas
Copyright 2021 Universal Solutions All rights reserved. - Terms of Service - Privacy Policy.