Brent headed for weekly loss

Crude Oil05 September 2014 – Brent crude retained its overnight losses and stayed below $102 a barrel on Friday, heading for its third weekly drop in four as a firmer dollar weighed, although data showing lower crude stocks in the US kept a floor under prices.

Oil prices on both sides of the Atlantic fell nearly $1 on Thursday as a surprise cut in interest rates by the European Central Bank led to a spike in the US dollar, making it more expensive for holders of other currencies to buy the dollar-denominated commodity.

Brent was trading 8 cents lower at $101.75 a barrel early on Friday, after settling down 94 cents. US crude was unchanged at $94.45 a barrel. The contract closed $1.09 lower.

Both benchmarks were on track to close the week with a loss of more than 1%.

“ECB monetary policy generally has a very muted impact on commodity prices. The impact is mostly through the dollar,” said Mark Keenan, head of commodities research Asia at Societe Generale.

Keenan, however, added that the “economic slowdown in Europe has been a downside risk to commodity markets, so the action is good in the sense that the European situation is being addressed”, suggesting the boost to the economy and increased liquidity may ultimately support risk assets, including oil.

Investors are now waiting for US jobs data later in the day for signs of demand in the world’s biggest oil consumer.

Oil prices found some support from a drop in US crude oil inventories, with data from the Energy Information Administration (EIA) showing a 905,000-barrel fall last week. US gasoline stocks dropped 2.3 million barrels.

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 385,000 barrels, the EIA said.

Production at the UK’s North Sea Buzzard oilfield has restarted and will ramp up over the next week after the demobilisation of a drilling rig, its operator said on Thursday, marking the return of one of the key fields that underpins Brent oil futures.

Oil output in Iraq’s Kirkuk has slumped to 30,000 barrels per day since June, 90% down on earlier this year, and a federal pipeline to the Turkish port of Ceyhan may be out of action for over a year due to sabotage, Kirkuk’s governor said.

In February this year Iraqi oil production hit record highs of 2.8 million bpd nationwide, with an estimated 300,000 bpd coming from Kirkuk in the north, where Islamic State fighters have seized swathes of territory and attacked oil installations.

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