19 November 2013, News Wires – Brent slipped to near $108 per barrel on Tuesday as renewed concern about the possible tightening of monetary policy in the US offset support from continuing oil supply disruption in Libya.
US crude futures posted their biggest daily loss in nearly a week on Monday after top Fed officials pointed to improvements in the US economy that could spur the central bank to start “tapering” its asset purchases.
Comments from incoming Fed chief Janet Yellen last week had suggested the central bank would continue with its ultra-loose monetary policy for some time.
January Brent crude fell 44 cents to $108.03 per barrel by Tuesday morning, down for the third straight session. US crude for December edged down 12 cents to $92.91.
However, Brent remained supported to some extent by Yellen’s comments, which had soothed fears of an imminent unwinding of the Fed’s $85 billion-a-month stimulus programme, Reuters cited Newedge Japan commodity sales manager Yusuke Seta as saying. Many in the markets do not expect any change until March.
The lack of a deal between major powers and Iran over its nuclear policy plus supply disruptions in Libya also supported Brent, Seta said.
“When we look at the Western conflict with Iran, it’s deeply rooted and not easy to resolve. That’s why Brent’s January/February spread is steady at about 50 cents a barrel,” he said.
The Western countries and Iran will meet from Wednesday to try to forge an interim deal on Tehran’s nuclear programme.
Sanctions have kept about 1 million barrels per day of oil from the global market and any deal could allow some of that oil to be sold, depressing a market that is already well supplied.
In Libya, fighting between rival militias and industrial unrest has spread across the country, causing its crude exports to fall by more than 1 million bpd over the past six months.
The price gap between West Texas Intermediate (WTI) and Brent may widen to $15 this week if US oil data showed higher inventories, Seta said.
“WTI is leading the crude market downwards because production in the US is increasing steadily and inventories in Cushing are rising,” he said.
US crude inventories were forecast to have increased by 100,000 barrels last week, while gasoline supply grew by 200,000 barrels, according to a Reuters poll.
Industry group the American Petroleum Institute will release its weekly data later on Tuesday while the US Energy Information Administration will report its data on Wednesday.