09 July 2013, News Wires – Brent crude dropped towards $107 a barrel on Tuesday as investors locked in profits after prices climbed to a three-month top in the previous session and as worries about supply for the Middle East eased, Reuters reported.
Libya’s major Sharara oilfield will resume operations after an agreement was reached with the armed group that shut it down last month, while a pipeline from Iraq to the Turkish port of Ceyhan will start operations in two to three days following an interruption caused by a leak, according to the news wire.
Brent slipped $0.33 to $107.10 by 03:51 GMT, after slipping to a session low of $106.90 earlier and off Monday’s peak of $108.04. US crude fell $0.14 to $103.00, recovering from a low of $102.71, Reuters said.
“The prices have tracked so much higher in the past few weeks because of firstly the Syrian civil war escalation and then the Egyptian crisis,” Vyanne Lai, an economist at National Australia Bank, told the news wire.
“So oil prices have built up to a point that, unless there are more major news about intensifying Middle East conflicts, you’re likely to see some form of correction.”
Oil prices posted their biggest weekly gain in a year last Friday, supported by worries that mounting tensions in Egypt could disrupt traffic through the Suez Canal, via which a major portion of the world’s oil is shipped.
But some of these worries have eased as Egypt’s interim head of state has set a speedy timetable for elections to drag the country out of crisis, after the military ouster of Islamist President Mohamed Mursi last week sparked a wave of bloody protests.
The US dollar resumed gains after slipping off three-year highs against major currencies earlier, which also weighed on oil prices. A strong dollar makes commodities priced in the greenback more expensive for holders of other currencies.
Investors are now eyeing data from China, the world’s number two oil consumer, that could show growth in the world’s second-largest economy grinding towards a 23-year low, according to a Reuters poll.
But oil could draw some support from an expected drop in US commercial crude stocks in the seven days to 5 July due to lower imports and higher refinery activity, a Reuters poll of seven analysts showed on Monday.