05 November 2013, News Wires – Brent futures on Tuesday traded near a four-month low touched overnight, but worries over a prolonged outage from oil exporter Libya helped the benchmark hold above $106 per barrel.
Heavy shooting erupted early on Tuesday in the Libyan capital, Tripoli, the latest surge in unrest in the Opec producer that highlights the government’s inability to control militia groups.
Brent crude edged 9 cents higher to $106.32 per barrel early on Tuesday, after hitting a four-month low of $105.13 overnight. US oil gained 10 cents to $94.72, also having slumped to a four-month low in the earlier session.
“Oil is looking for a bottom, and the downside we are seeing now is quite temporary,” Reuters quoted Astmax Investments commodities fund manager Tetsu Emori as saying.
“The outage in Libya is keeping the demand-supply balance quite tight as we head into the peak heating oil demand season.”
Emori expects oil to trade in a tight range ahead of key data from the US, including gross domestic product and employment later this week, which will give investors a clearer view of the demand outlook for the world’s biggest oil consumer.
Investors are also waiting for these US numbers to gauge when the Federal Reserve may start to roll back its monetary stimulus. A cutback would reduce the supply of dollars, boosting the currency and making dollar-denominated assets such as oil more expensive for holders of other currencies.
Comments by top Fed officials overnight showed that a cut-back in the stimulus was not imminent, Reuters reported.
Recent protests and strikes at ports and oilfields have already knocked Libyan crude production down to some 10% of its capacity of 1.25 million barrels per day.
The gunfire in Tripoli comes after leaders of an autonomy movement in the country’s oil-rich east unilaterally declared a regional government on Sunday.
The attacks are a blow to efforts by the government to reopen eastern oil ports and fields blocked since summer by militias and tribes demanding a greater share of power and oil wealth.
“Libya is not a very big exporter, but it is not very small, either,” Emori said.
“It is a factor that is supporting prices.”
Oil was also under pressure from expectations that crude stockpiles in the US have risen.
A Reuters survey of six analysts taken ahead of weekly inventory reports from industry group the American Petroleum Institute and the US Energy Information Administration forecast that crude stocks would increase by an average of 1.8 million barrels.