26 May 2014, News Wires – Brent crude edged down towards $110 a barrel on Monday, dipping further from last week’s two-and-a-half month high as worries over Ukraine eased slightly after its presidential election.
Resistance levels for Brent and West Texas Intermediate on technical charts are also preventing prices from rising further. Market activity is expected to be limited as the US and UK markets are closed for holidays.
July Brent crude was at $110.06 a barrel, down 48 cents, early on Monday. US crude futures for July delivery edged down 29 cents to $104.06 a barrel, after settling on Friday at the highest since 21 April.
Brent has risen briefly past a resistance level at $110.65 last week while WTI has traded near its resistance to $105, said Ric Spooner, chief analyst at CMC Markets in Sydney.
“There’s a bit of a caution here … markets are struggling to get past the chart resistance,” he said.
Money managers raised their net long US crude futures and options positions in the week to 20 May, the US Commodity Futures Trading Commission (CFTC) said, ahead of peak summer demand. The Memorial Day holiday on Monday usually marks the start of the US driving season.
“Although demand is going to pick up during the driving season, inventories are very high and supply capacities are very high so there shouldn’t be too much pressure on markets,” Spooner said.
Fighting in Ukraine and production cuts in Libya and South Sudan pushed Brent up to a two-and-a-half month high last week.
On Sunday, a decisive win for billionaire Petro Poroshenko in Ukraine’s presidential election raised hopes of political stability in Ukraine although a fraught mission to quell pro-Russian rebels and steer the fragile nation closer to the West await him.
“I don’t think the market really factored in any new risks in there,” CMC’s Spooner said.
Libya’s El Sharara and El Feel oilfields remain shut, a spokesman for state-run National Oil Corporation said on Sunday, almost two weeks after the government said protests at the western fields had ended.
Statoil said on Friday that it has resumed some production at the Snorre B platform in the North Sea.
Sabre-rattling between Iraq and Kurdistan over oil exports also heightened tensions in the region.
Iraq filed for arbitration against Turkey on Friday to stop exports of oil from Kurdistan after European markets bought the first load of oil piped from the autonomous region. Kurdistan said this was a “hollow threat” that will fail.