25 July 2014, News Wires – Brent crude held steady above $107 per barrel on Friday, on track to end the week flat as tensions in oil producing regions supported prices against weak demand and plentiful supplies.
Oil prices have traded in a tight range this week with robust economic data from the US, China and the euro zone also failing to push prices higher.
“It is very unusual that big geopolitical events such as Iraq, Ukraine and Gaza, which normally are very sensitive to the price of oil, almost haven’t affected prices,” Ayers Alliance chief investment officer Jonathan Barrett told Reuters, noting that trading volumes have dropped off.
“The only conclusion we can draw is that the world is awash with oil,” he said.
Brent crude for September delivery traded 10 cents higher at $107.17 per barrel by Friday morning. The contract had closed $0.96 lower on Thursday.
US crude for September delivery was down $0.05 cents at $102.02 per barrel, after settling $1.05 lower.
Conflicts in Ukraine, Gaza and Iraq raged on, but failed to push prices higher as global supplies remained ample.
In Libya, oil production has risen to 500,000 barrels per day, but there is no progress on reopening Brega oil port after an agreement to end a protest there, a spokesman for state-run National Oil Corporation said.
Gazan authorities said Israeli forces shelled a shelter at a UN-run school on Thursday, killing at least 15 people as the Palestinian death toll in the conflict climbed higher than 760 and attempts at a truce remained elusive.
Members of the European Union on Thursday also considered proposals targeting state-owned Russian banks vital to Moscow’s faltering economy in what would be the most serious sanctions so far over the Ukraine crisis.
Further supporting oil prices, US Labor Department unemployment data suggested that the economic recovery remained on track, with initial weekly jobless claims falling to their lowest since February 2006.
“The market seems to be quite happy to be in a range,” Barrett said. “None of the big players are pushing [the market] around. And if you don’t have the volume in the market, it doesn’t create the opportunity for large movements.”
Oil inventories in Cushing, Oklahoma, fell another 163,000 barrels over the four days to 22 July data from Genscape Inc showed on Thursday, deepening a slump that has already dragged stockpiles to their lowest in six years.
Drawdowns at Cushing – delivery point for West Texas Intermediate contracts – have dropped stocks there to near what traders consider to be minimum operating levels, fuelling a sharp rise in prompt US crude oil prices.
The gap between US oil futures and Brent narrowed to as little as $4.47 this week, near a three-month low, although it widened again to $5.15 on Friday.