05 August 2014 – Brent held steady above $105 a barrel on Tuesday despite ample crude supplies, supported by political tension in the Middle East and North Africa and expectations that data will show a further draw on US crude inventories last week.
But gains were checked as investors waited for economic data from the US and Europe later on Tuesday to give the market direction.
Brent crude rose for the second straight session, climbing 14 cents to $105.55 early on Tuesday, after gaining 57 cents on Monday. US crude was up 12 cents at $98.41, after rising 41 cents to settle at $98.29 a barrel.
“The market is relatively complacent – we’re oversupplied with oil. Traders are trying to work out the next driver,” said Jonathan Barratt, chief investment officer at Sydney-based wealth management firm Ayers Alliance.
Investors were concerned about the situation in the Middle East, North Africa and Ukraine, but supply disruptions are not a big concern for the moment, Barratt said.
Brent closed at $104.84 a barrel in Friday, its lowest settlement since 2 April, while Brent for immediate delivery has been at a discount to futures for the longest period since 2011. This contango market structure indicates a well-supplied market.
“I would like to see expectations of economic growth translate into demand but we haven’t seen it yet because prices are doing nothing,” Barratt said.
A slew of data including US factory orders, eurozone retail sales and PMI figures will be released later on Tuesday.
“Investors are keeping a close eye on oil inventory levels out of the US as it’s the summer drive time,” Barratt said. “I would think prices will continue to remain bearish.”
A preliminary Reuters survey of analysts on Monday suggested US commercial crude inventories fell by about 1 million barrels in the week to 1 August, while gasoline stocks remained unchanged.
The survey was taken ahead of weekly inventory reports from industry group the American Petroleum Institute (API) and the US Department of Energy’s Energy Information Administration (EIA).
Libya’s oil output has fallen to about 450,000 barrels per day from 500,000 bpd a week ago, although oilfields remain secure, a spokesman for the National Oil Corporation said on Monday, without giving details.
Oil production has dropped from 1.4 million bpd a year ago because of strikes by oil guards and violence between rival factions in Tripoli and Benghazi that has damaged Tripoli’s main airport and sent foreign diplomats and workers fleeing abroad.
Oil exports from Iraq, Opec’s second-largest producer, increased to an average of 2.442 million barrels per day (bpd) in July from 2.423 million in June, the oil ministry said on Monday, even though Islamic State insurgents tightened their grip in the north.
Iraqi Prime Minister Nuri al-Maliki ordered his air force for the first time to back Kurdish forces battling the Sunni militants, state television reported on Monday.
Russia announced military exercises involving more than 100 jet fighters and bombers near the border with Ukraine on Monday in a show of strength as the Ukrainian army recaptured more territory from pro-Russian separatists in the east of the country.