10 December 2013, News Wires – Brent crude oil rose above $110 a barrel on Tuesday as it recouped some of the $2.22 wiped off its value in the previous session in the sharpest one-day fall in more than five weeks.
Brent for January was up 79 cents at $110.18 a barrel by 1100 GMT, having risen briefly by more than $1 to $110.45. This followed a 2% drop on Monday, its biggest daily loss since 1 November, when it fell 2.7%.
US crude oil futures were up $1.08 at $98.42 a barrel after their first decline in seven sessions on Monday.
“It was a very steep fall yesterday, for one thing,” Christopher Bellew, broker at Jefferies Bache, commented. “So the rise is a little bit of a reaction to that.”
Underpinning Brent was persistently low output in Libya at 250,000 barrels per day (bpd), down from 1.4 million bpd in July.
Blockades of Libya’s eastern terminals and intermittent disruptions in the west could cap output at 800,000 bpd in 2014, Adam Longson, a commodities strategist at Morgan Stanley, wrote in a note.
Prices also gained support from a weakening of the dollar against the euro, with the greenback hitting a six-week low against the single currency.
Implied Chinese oil demand in November rose 1.5% from October’s 9.79 million bpd and was the highest level in five months. However, it fell 5.1% from a year earlier, according to Reuters calculations based on preliminary government data.
Iranian Foreign Minister Javad Zarif said any new sanctions from the US Congress on Iran would end its nuclear deal with major powers, Time Magazine reported. The November deal had raised the prospect of more oil supply and deflated a risk premium in oil prices.
Brent’s premium to US crude has narrowed about $7 in nearly two weeks as TransCanada has begun filling a 700,000-bpd pipeline that will transport crude from Cushing, Oklahoma, to Gulf Coast refiners.
US crude may strengthen further as US commercial crude oil stock figures to be released at 2130 GMT are forecast to have fallen for a second week last week by 2.7 million barrels, a Reuters poll of analysts showed.