14 February 2014, News Wires – Brent crude held steady below $109 a barrel on Friday, on track for a modest weekly decline, as supply disruptions in Libya and Angola balanced downbeat US economic data.
Libya’s oil production fell by more than 100,000 barrels per day this week, after protesters shut two key pipelines, the country’s state oil company said. Further south, BP declared force majeure at an Angolan oilfield, which could jeopardise exports of up to 180,000 bpd.
Brent crude for April delivery was down 1 cent at $108.51 a barrel early on Friday, after settling 6 cents lower. US crude for March delivery also traded 1 cent lower at $100.34 a barrel, after losing 2 cents in the previous session.
An unexpected drop in US retail sales in January combined with a spike in weekly jobless claims raised doubts about growth in the world’s biggest economy, undermining expectations of higher global oil demand growth this year.
“I don’t buy this demand growth story,” said Yusuke Seta, a commodity sales manager at Newedge in Tokyo.
“Many are expecting bigger gains in global oil demand this year, but I am not that optimistic because the economies in the United States and China have not recovered yet,” he said, pointing also to demand concerns in developing countries.
Data from the International Energy Agency (IEA) Thursday showed oil inventories in the developed world fell by 1.5 million bpd in the last three months of 2013, the steepest quarterly decline since 1999.
Inventories have been drained to the lowest level since 2008 due to stronger-than-expected demand, tightening the market and defying predictions of a glut, the IEA said.
“I don’t think the optimistic oil demand growth scenario will last until the end of the year,” Seta said, adding he expects a reversal of the fall in global inventory levels.
US crude remained above $100 per barrel, looking to stretch its weekly gains to a fifth week – its longest winning streak in over a year – after a sustained drain in stockpiles at Cushing, Oklahoma, the delivery point of the contract.
Chinese economic data released earlier Friday offered a little more insight on the state of the world’s second biggest economy following recent weak manufacturing and strong trade numbers.
Consumer prices rose 2.5% in January from a year earlier, remaining tame, but producer prices fell 1.6%, official data showed, broadly in line with market expectations.
Oil prices were supported by news that Libya’s oil output dropped to 460,000 bpd on Thursday after protesters shut down pipelines from the El Wafa and El Sharara oilfields.
Concerns about Libyan supply had been calmed after production was restored at the 340,000 bpd El Sharara field at the start of the year.
However, protesters partially shut down a pipeline near Zintan leading from El Sharara in southern Libya to the port of Zawiya in western Libya, a spokesman at the National Oil Corporation said.
As a result, Libya’s total production fell to 460,000 bpd on Thursday, compared with 567,000 bpd on Tuesday, according to LANA state news agency.
Adding to supply concerns, BP Thursday declared force majeure on exports of Plutonio crude from Angola after production had been cut back due to damage to a hose.
Traders said there will be no cargoes of Plutonio loading in March due to maintenance at the field. The Plutonio stream is scheduled to export 179,000 bpd in February, according to loading programmes provided by trading sources.