Brent headed for weekly loss

rubbermarketnews_RMN_brent_crude_oil_05010 May 2014, News Wires Brent crude held steady above $108 per barrel on Friday, supported by renewed tension in Ukraine and continued limited supply from Libya, but still on track for a second weekly loss.

Pro-Moscow separatists in eastern Ukraine ignored a public call by Russian President Vladimir Putin to postpone a referendum on self-rule, declaring they would go ahead on Sunday with a vote that could lead to war. Yet, gains were capped by the slow, steady progress in talks between Iran and world powers in ending Tehran’s disputed nuclear programme.

“Geopolitical risks seem to be overshadowing seasonally softer demand in Brent with a plethora of factors enduring in key supply markets,” ANZ analysts said in a note.

“The Ukraine and Libya remain as upside risks, while the looming resolution of Iranian discussions with the West is the main downside risk.”

Brent crude for June delivery was flat at $108.04 per barrel early on Friday, after closing 9 cents lower. The contract is poised to slip 0.5% this week.

US oil was up 17 cents at $100.43. The contract, which settled 51 cents lower on Thursday, was on course for its first weekly gain in three, boosted by a surprise drop in US crude inventories last week.

Leading to a further worsening of relations between Russia and the West, European Union governments have laid the groundwork for possible sanctions against Russian companies, including energy giants, over Ukraine.

Senior EU diplomats reached a preliminary agreement late on Wednesday to expand the legal criteria for imposing sanctions on Russia, with the goal of making it easier to freeze the assets of companies involved in the Ukraine crisis.

A Libyan government deal to reopen major oil ports controlled by rebels looks likely to unravel as the appointment of a new Islamist-backed prime minister has fuelled distrust that is eroding support for the accord.

Still, Libya’s government said it remains committed to implementing an agreement with the rebels occupying the eastern ports of Ras Lanuf and Es Sider and hopes the export terminals will reopen soon.

Oil investors were also watching progress in the talks over Iran’s nuclear programme.

Iran and six world powers held more “useful” talks on Tehran’s nuclear programme, both sides said, although a Western diplomat said they were still struggling to overcome deep disagreements on the future of Iranian atomic capabilities.

The two days of expert-level talks in New York were a prelude to next week’s political-level negotiations in the Austrian capital Vienna.

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