Brent edges up on supply cuts

Brent crude29 July 2013, News Wires – Brent futures were little changed above $107 a barrel on Monday as concerns surrounding demand growth were countered by a weak dollar and fears about supply disruptions.

Brent crude oil edged up on Monday as a weaker dollar and fears over supply disruptions outweighed concerns about the prospects for global oil demand growth.

Oil exports from several suppliers have been curtailed in recent weeks, stopping or reducing shipments from Libya, Iraq, the North Sea and elsewhere and leading to more than 500,000 barrels per day being removed from the market.

Other suppliers, such as Sudan, may see their exports reduced in the coming weeks, analysts say.

The lost production helped bolster a market that has been worrying about the prospects for fuel demand as several markets, including as China, experience slower growth.

Brent crude rose 31 cents to $107.48 per barrel by 1330 GMT, after ending 48 cents lower on Friday and sliding for a second straight week. US oil rose 25 cents to $104.95 after settling 79 cents down in the previous session.

“We expect some more jittery trading in oil,” said Andrey Kryuchenkov, oil and commodities strategist at Russian bank VTB Capital in London. “Any macro related correction would be limited due to ongoing short-term supply worries.”

Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt said the market appeared fairly balanced but investors had been “taking money off the table after a strong run-up a couple of weeks ago.”

“There is potential for a correction lower, particularly after a rise in speculative long positions,” Fritsch said.

Hedge funds took huge positive bets on US crude last week just before the market turned lower. Positive wagers by money managers on US crude reached a record high for the week ended 23 July, data from the Commodity Futures Trading Commission showed.

Intercontinental Exchange data on Brent and gasoil showed a similar rise in net long positions. A weaker dollar also helped support oil.

The US currency slumped to a one-month low against the yen on Monday, reflecting expectations that the Federal Reserve will offer forward guidance on Wednesday that it intends to keep interest rates low for some time.

The dollar often moves inversely to oil as many key commodities are priced in the US currency.

The North Sea’s Forties pipeline has cut pumping rates by about 40,000 barrels per day  because of maintenance, trade sources said, tightening supply of the crude that underpins the Brent benchmark.

Explosions rocked the eastern Libyan city of Benghazi on Sunday, while protests in Egypt fuelled worries the conflict may spill over into other countries in the Middle East.

Operations at Libya’s two main crude oil export terminals, Es Sider and Ras Lanuf, halted on Monday due to strikes, shipping and trading sources said.

But global oil production remains robust. US crude output hit its highest since 1990 in the week ended 19 July, data from the Energy Information Administration showed.

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