Brent Oil down near $107.50 on Renewed Supply Worries
Brent oil bounced off of three-month lows on Monday to near $107 a barrel as the potential for renewed supply disruptions put a floor under prices that have been tumbling since the last week of June.
Brent lost $2.01 on Friday to settle at $106.66 a barrel, the lowest finish since April 7. The benchmark lost about 3.6 percent last week, the steepest weekly fall since early January. But the market could see a strong rebound this week amid new and continuing violence in Libya and Iraq, and worries that a final deal may not be reached between Tehran and world powers.
“I’ve been a bear on oil. I still feel bearish but I feel it’s gone too far,” said Jonathan Barratt, chief executive of Sydney commodity research firm Barratt Bulletin.
The uncertainty over a deal with Iran on its nuclear program, renewed fighting in Libya on Sunday, weekend bomb attacks near the Iraq capital Baghdad, and continuing tensions in Ukraine created a “whole basket of worry”, Barratt said.
Brent crude was up 55 cents above $107 on Monday after initially falling to $106.27 earlier in the session. U.S. crude futures fell 20 cents to stay under $101. The U.S. benchmark lost $2.10 in the previous session to close at $100.83 a barrel, its lowest settlement since May 12. Brent could be trading around $108 a barrel next Friday, while U.S. could be around $102-$103 a barrel, Barratt said.
The market remains focused on the status of Libyan oil supplies, Barratt said. The return of Libyan barrels to market was one of the main factors that had driven prices lower.
While Libya’s oil output had risen to 470,000 barrels a day, the eastern port of Brega remained closed because of protest by oil security guards, a spokesman for the state-run National Oil Corp (NOC) said on Sunday.
Heavy fighting also broke out between rival militias vying for control of Libya’s main airport on Sunday, killing at least seven people and halting all flights in the worst fighting in the capital for six months. The violence led the United Nations to move some staff out of the OPEC producer, and the U.N. said on Sunday all international staff could be relocated if the fighting escalated.
With the July 20 deadline looming for a deal on Iran’s nuclear program and six world powers, major differences persist over an agreement, U.S. Secretary of State John Kerry said on Sunday.
Source: CNBC
