US oil settles at two-month high

Oil drilling rigs27 December 2013, News Wires – US crude oil futures closed on Friday with their biggest gain in more than two months driven by the fourth straight weekly decline in oil inventories while Brent crude drew support from civil unrest in Africa that has cut off supplies, according to a report.

Brent gains were capped as traders sold contracts to unwind the spread between the European benchmark and its American counterpart, Reuters reported.

Brent’s rise was also checked after South Sudan government forces said they had defeated rebels in the capital of the country’s major oil producing state, after four days of intense fighting.

By Friday afternoon, the government said it was ready for a ceasefire according to the news wire.

Escalating violence in South Sudan had threatened to reduce its crude output further, adding to supply outages in Libya, where production is running at a mere 250,000 barrels per day.

Prices were supported by US government data that showed crude oil stocks in the US fell 4.7 million barrels in the week ended 20 December, double the forecast of a 2.3-million-barrel draw.

Brent oil ended the day 20 cents higher at $112.18 per barrel, the highest settlement since 3 December.

US crude added 77 cents to settle at $100.32, the highest settlement price since 18 Octover. US oil futures broke above the $100-mark for the first time since 21 October.

The spread between the two benchmarks narrowed $0.57 to $11.86 per barrel from the previous session.

“The selling pressure in the spread showed up as WTI rallied,” said Gene McGillian, analyst with Tradition Energy in Stamford, Connecticut.

“There’s strong demand here from the refining sector and the annual destocking is giving the market some support,” said John Kilduff, a partner at Again Capital LLC.

“The demand numbers were supportive yet again from the products side.”

Oil output in South Sudan had fallen by nearly a fifth to 200,000 bpd after the Unity state oilfields shut earlier this week due to fighting.

In Libya, a mix of militias, tribesmen and political minorities, demanding a greater share of the country’s oil wealth and more political power, have shut most oilfields and ports, cutting oil output to 250,000 bpd from 1.4 million bpd in July.

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