Oil holds at $108

rubbermarketnews_RMN_brent_crude_oil_05006 May 2014 – Brent crude held steady below $108 per barrel on Tuesday as clashes across Ukraine added to geopolitical risk supporting the market.

This kept prices high, working against expectations of higher inventories in the US.

Data released overnight showing a spike in US service sector growth, could offset some of the pessimism generated by disappointing Chinese manufacturing data.

Brent crude for June delivery was $0.03 lower at $107.69 per barrel by Tuesday morning, after settling $0.87 down. US oil was also$0.03 lower at $99.45, following a fall of $0.28 on Monday.

“The services data adds more evidence that the US economy is indeed recovering, helping lift the prospect for crude oil demand in the United States,” Phillip Futures investment analyst Chee Tat Tan told Reuters.

In one of the first signs that the conflict in the Ukraine has impacted Russian energy shipments, Russia’s state pipeline operator stopped diesel shipments to Ukraine and Hungary last month due to uncertainties over the pipe’s ownership.

Oil prices remain subdued because of plentiful supplies, with US commercial crude oil inventories forecast to hit a new record high for the third week in a row due to higher imports.

The American Petroleum Institute is due to issue its weekly inventory report on Tuesday, while the US Department of Energy’s Energy Information Administration (EIA) will issue its report on Wednesday.

A preliminary Reuters poll of five analysts, taken ahead of reports, showed expectations centering around a rise of 1.5 million barrels in crude oil stocks for the week ended 2 May.

EIA data wiped 2% off US oil futures last week by showing US crude stocks hit a record high on the week ending on 25 April, led by another steep increase on the Gulf Coast.

“The concern is that the market cannot keep up with the pace of production,” Tan said.

Higher Libyan exports have also put pressure on oil prices in recent weeks. The country’s oil production currently stands at 250,000 barrels per day, but the vital southern El Sharara oilfield remains closed.

A new protest has shut down the Zultun and Raquba oilfields in central eastern Libya, halting their combined output of 39,000 bpd.
*Bianca Bartucciotto-Upstreamonline

About the Author