07 July 2014, News Wires – Brent crude prices hovered near a three-week low just above $110 a barrel on Monday, hurt by a potential rise in oil supply as Libya gears up to resume exports from two ports that have been closed for nearly a year.
The benchmark dropped 2.3% last week, its biggest weekly decline since early January, on the Libyan news. Brent is about $5 a barrel below its highest point this year – marked in June when fighting broke out in northern Iraq.
August Brent had edged up 6 cents to $110.70 a barrel early on Monday. US oil for August delivery fell 15 cents from Thursday’s settlement to $103.91 a barrel. There was a public holiday in the US on Friday.
Libya’s state-run National Oil Corporation (NOC) lifted force majeure from the major eastern Ras Lanuf and Es Sider oil ports after rebels agreed last week to end a blockade to press financial and political demands.
“It’s going to put some pressure on Brent, but still we need to see how much exports will return,” said Ken Hasegawa, a commodities sales manager at brokerage Newedge Japan.
The two Libyan oil ports had been exporting about 500,000 barrels per day of crude, a chunk of the 1.4 million bpd that the Opec producer pumped in the second quarter last year before protests started.
But geopolitical tensions in Iraq and Ukraine kept supporting oil prices.
“There is still uncertainty in Iraq and Ukraine, supporting oil prices at these levels,” Hasegawa said, adding that Brent could easily test the year’s high if there was any sign of supply disruption.
The conflict between the Iraqi government and Sunni militants has yet to impact exports from the second largest Opec producer.
Iraq’s parliament is in a deadlock to form a new government. Shi’ite Muslim cleric Moqtada al-Sadr has urged Prime Minister Nuri al-Maliki’s coalition to withdraw its support for his bid for a third term and pick another candidate.
In Ukraine, the government re-took their stronghold of Slaviansk in what President Petro Poroshenko called a turning point in the fight for control of the country’s east.
Investors were also eyeing Chinese trade data due later this week for further evidence that the world’s second largest economy is regaining steam in the second quarter after last week’s strong manufacturing and services sectors surveys.