31 October 2013, News Wires – Brent crude edged lower on Thursday, but held up well above $109 a barrel and is set to end October with its fourth monthly gain in five, bolstered by disruptions to shipments from key producer Libya.
US oil futures, however, are on course for their worst month since February, having fallen more than 5% so far in October amid a sustained increase in stockpiles in the world’s top oil consumer, even as the Federal Reserve left its economic stimulus intact.
US crude’s losses have widened its discount to Brent to about $13, near six-month highs reached last week.
Brent crude for December delivery was off 17 cents at $109.69 a barrel early on Thursday. The crude benchmark is up 1.2% in October.
“The situation in Libya remains uncertain. There were expectations earlier of a gradual recovery in production but provided there’s no further escalation in protests,” said Chee Tat Tan, investment analyst at Phillip Futures.
Strikes and protests by militias, and minorities demanding more political rights or better pay have reduced Libya’s exports to 90,000 barrels per day from its capacity of 1.25 million bpd.
Oil production remained at a trickle after the western ports of Zawiya and Mellitah suspended exports this week, on top of the closure of most eastern facilities. Only one tanker was expected to load condensates in Mellitah, trading sources said, even as Prime Minister Ali Zeidan announced plans to build two oil refineries.
US crude was off 13 cents at $96.64 a barrel. West Texas Intermediate oil has fallen 5.6% this month, its steepest loss since February.
Oil stocks at Cushing, Oklahoma — the delivery point for US oil futures — rose by more than 2 million barrels last week, the largest build since December 2012, according to data from the US Energy Information Administration.
The data, released on Wednesday along with figures showing the largest six-week increase in overall US inventories since April 2012, helped widen the spread between WTI and Brent to $13.36 overnight. That gap hit $13.40 on 23 October, the biggest since early April.
“While we continue to get numbers that support the evidence that there is an excess of supply, we’re looking for demand to ramp up to clear that inventory,” said Ben Le Brun, market analyst at OptionsXpress in Sydney.
“I would certainly expect some demand, be it technical or fundamental, to kick in before WTI reaches $95.”
US oil touched a four-month low of $95.95 last week, but has regained some ground since on expectations demand would pick up as US refineries emerge from maintenance season.