04 February 2014, News Wires – Brent hovered at around $106 per barrel on Tuesday as a frigid winter boosted heating oil demand in Europe and the United States, offsetting weak economic data from the US and China.
Supply cuts in Libya and in the North Sea also limited losses for Brent.
Bad weather reduced output from Libya while Prime Minister Ali Zeidan stepped up the pressure on protesters blocking eastern ports on Monday, telling them he had weeks ago ordered troops to prepare to move there to end their blockade.
March Brent crude edged down $0.06 cents to $105.98 a barrel by Tuesday morning after two straight sessions of losses.
US crude inched up $0.13 cents to $96.56 a barrel following its largest daily percentage loss in nearly a month as it tumbled with US equities.
“Oil fundamentals seem supported in the short term because OECD distillates inventories are low,” Mitsubishi risk manager Tony Nunan told Reuters.
US distillate stocks, including heating oil and diesel fuel, were forecast to have fallen 2.2 million barrels on average last week, a preliminary Reuters poll of analysts showed.
US commercial crude oil and gasoline stockpiles were forecast to have risen last week.
The next support for West Texas Intermediate (WTI) crude is at $96 per barrel, Nunan reportedly said.
“The support for WTI is more constructive as they really had a cold winter,” Nunan said, adding that two more snowstorms were forecast to hit the US.
Oil is also gaining support from tighter supply in the North Sea as the Buzzard oilfield, the largest field that contributes to forties, has had a new output glitch.
Slowing economic growth in the US and China raised concerns about fuel demand at the world’s largest oil consumers while forecasts of excess supply this year weigh on oil prices.
The US economy has lost steam as manufacturing activity slowed sharply in January on the back of the biggest drop in new orders in 33 years, while construction spending barely rose in December.
“The macroeconomic picture looks bad and that’s why equities are weak. The so called risk-off trade is in vogue now,” Nunan reportedly said.
He added that the Federal Reserve’s decision to further reduce its bond purchases has compounded problems for emerging economies.