13 January 2014, News Wires – Brent crude edged lower toward $107 a barrel on Monday after six nations struck a fresh six-month deal with Iran to curb its nuclear programme and US President Barack Obama urged congress not to impose additional sanctions on the country.
Crude oil prices trended lower following gains on Friday after weaker-than-forecast US non-farm payrolls suggested the Federal Reserve may slow down tapering its bond-buying stimulus, according to Reuters.
Brent crude for February delivery fell $0.15 to $107.10 per barrel by Monday morning, after settling $0.86 higher on Friday, the news wire reported.
US crude also slipped, to $92.45 per barrel. The contract had settled $1.06 higher on Friday.
“Obama’s comments act in favour of Iran and contribute to more downside in oil markets given the potential inflow of Iranian barrels to oil markets,” Chee Tat Tan, investment analyst at Phillip Futures in Singapore, told Reuters.
The highly anticipated US jobs numbers on Friday showed a rise of just 74,000 in December, the smallest increase since January 2011.
“While the numbers were relatively disappointing, this will help alleviate expectations about Fed tapering,” said Tan.
Massive bond purchases by the Federal Reserve have boosted liquidity and appetite for risky assets such as oil.
“All in all, I think the jobs data is slightly supportive for oil prices,” said Tan.
A deal between Iran and six major powers intended to pave the way to a solution to a long standoff over Tehran’s nuclear ambitions will come into force on 20 January, the Iranian Foreign Ministry and the European Union reportedly said on Sunday.
Sanctions against Iran over its nuclear programme have kept about 1 million barrels per day of oil off global markets, but an agreement reached 24 November last year raised hopes of a long-term deal that could see Iran resuming full exports.
Obama urged the Congress not to impose additional sanctions on Iran, saying that doing so risked undermining the 24 November agreement, which aims to give the two sides six months to reach a comprehensive deal.
However, Washington would be prepared to increase its sanctions if Iran fails to abide by the agreement, Obama added.
In a deal that seemed to undermine Western sanctions against the country, sources reportedly said Iran and Russia are negotiating an oil-for-goods swap worth $1.5 billion a month that would enable Iran to lift oil exports substantially.
More South Sudanese supply could also find its way to global markets, after the country’s army said it had regained a rebel-held northern town, giving the government control of a region where oil production had been halted by fighting in recent weeks.
Brent prices were supported by reports of fresh production problems at the North Sea’s Buzzard oilfield.
Buzzard is the largest of the fields that contribute to the Forties crude blend, the most important of the North Sea crudes underpinning the Brent crude benchmark.
In Libya, the tension between government forces and rebels groups worsened after gunmen killed the country’s deputy industry minister, Hassan al-Drowi, on Saturday.
Libya is still plagued by violence and assassinations more than two years after civil war ousted Muammar Gaddafi, which has hurt oil output from its peak of 1.6 million barrels per day.
Libya’s El Sharara field is currently producing 300,000 bpd of oil compared to its peak output of 340,000 bpd, the country’s oil minister reportedly said Sunday.