• Thursday, February 22, 2024
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Brent oil drops toward $105 on rising supply, heads for weekly loss

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Brent crude slipped toward 105 dollars a barrel on Friday as rise in supply from Libya and Iran put a drag on prices, although an OPEC production cut checked losses.

Libya’s crude production has partially recovered after it restarted output at the El Sharara field.

Meanwhile, progress in nuclear talks between the major powers and Iran could soon ease sanctions that have curbed exports from the OPEC producer.

Brent crude fell 21 cents to 105.54 dollars a barrel, on track for a weekly decline of 1.7 per cent.

US crude inched up 12 cents to 94.08 dollars a barrel and was set to post its first weekly gain in three weeks.

Sanctions have cut Iran’s oil exports by more than half over the past 18 months to about one million barrels per day (bpd).

A preliminary accord between Iran and the P5+1 group of world powers will start on Jan. 20 while talks on a final settlement will start in February.

Iran expects fellow OPEC members to cut back output and make room for rising oil supplies from Tehran when Western sanctions are lifted, Foreign Minister ohammad Javad Zarif said.

The restart of Libya’s El Sharara two weeks ago and a jump in exports from Iraq’s southern terminals in the first two weeks of 2014 also weighed on crude prices.

However, the oil market will remain supported as domestic tensions continue to threaten the oil sector in Libya.

Earlier this week, Libyan authorities held talks with protesters who threatened to restart a blockade of the El Sharara field.

Also, Iraq’s supply could be cut in February on loading delays caused partly by bad weather.

Outages in Libya and elsewhere are taking a toll on output from OPEC, which is pumping less than this year’s global need for its crude, the exporter group said on Thursday.

“Prices have hit bottom already and the market is probably looking for factors to rebound,” Tetsu Emori, a commodity fund manager at Astmax Investment said.

“I don’t really see any potential risks for a downside,” he said, “as OPEC will start cutting supply if oil falls below 100 dollars’’, he said.

In the United States, new pipeline capacity to divert excess oil away from West Texas Intermediate’s delivery point in Cushing, Oklahoma, is being brought on-stream.

Reuters