08 April 2014, News Wires – US oil futures dipped below $100 on Monday, falling more than a dollar a barrel after stock markets tumbled, with Brent crude prices losing even more on the prospect of additional supplies from Libya.
Wall Street’s S&P 500 stock market index looked to be on track for its biggest three-day drop in two months, pushed down by shares of fast-growing industries, or momentum shares, and by disappointment with US jobs data issued on Friday, Reuters reported.
US and Brent crude also took a hit on Monday from an agreement by Libyan rebels occupying four eastern oil ports to end an eight-month blockade. The Zueitina oil port said it was ready to load crude as early as Monday.
Brent was down $1.50 and West Texas Intermediate by more than a dollar at one point but towards the end of the day both pared losses. Brent settled at $105.82, down 90 cents, and WTI at $100.44, down 70 cents, Reuters said.
“Once we get to a point where short-term traders don’t think we’re going to make new lows, there’s a short-term amount of profit-making that comes into the market,” said Tim Evans, an analyst at Citi Futures Perspective, told the news wire.
“In terms of the fundamentals, the big debate is whether this deal to re-open the Libya oil ports is truly going to hold and how much production will come back on line and how soon.”
Under the deal thrashed out over the weekend, Libya’s Zueitina and Hariga ports, held by federalist rebels demanding more autonomy from Tripoli, are to open almost immediately.
The larger ports of Ras Lanuf and Es Sider will be freed up in two to four weeks after more talks. The end to the port standoff is removing some supply worries that had helped push prices as high as $112.
Brent swung between a low of $105.13 and a high of $106.63, while US crude traded between $99.92 and $101.32, which analysts said reflected investor uncertainty about the Libyan deal holding. The fall in oil prices snapped a two-day rise.
Losses in oil were checked by renewed tensions over the weekend in Ukraine, which raised concerns about the possibility of a deeper diplomatic rift between Russia and the West.
Pro-Moscow protesters in eastern Ukraine seized arms in one city and declared a separatist republic in another in moves Kiev described on Monday as part of a Russian-orchestrated plan to justify an invasion to dismember the country.
Crude may come under further pressure in the coming days when Iran and six world powers hold new talks in Vienna, intending to reach agreement by 20 July on how to resolve the decade-old standoff over Iran’s nuclear programme.
Iran said it hopes to make enough progress in the talks for negotiators to start drafting an agreement by mid-May. Sanctions against Tehran have kept much Iranian oil off international markets.
“If they make more progress (in talks), it could be very bearish. Iran is itching to sell more oil and the market is thinking bearishly. Every meeting is closer to when Iran’s oil is back in the market,” Flynn said.
Focus will also be fixed on US oil inventory data, with American Petroleum Institute numbers coming out on Tuesday and Energy Information Administration figures being released on Wednesday.