13 February 2014, News Wires – Brent crude slipped towards $108 a barrel on Thursday, falling for the first time in three sessions on worries of a drop in consumption as refineries enter the maintenance season.
Losses were limited as data showed record crude imports by China in January, and major forecasters US Energy Information Administration (EIA) and Opec raised their expectations for oil demand growth this year.
Brent crude for March delivery, which expires on Thursday, was down 23 cents at $108.56 a barrel early on Thursday, after closing up 11 cents in the previous session.
The more actively traded Brent contract for April delivery was down 28 cents at $108.07 per barrel.
US crude was 54 cents lower at $99.83 per barrel, about $1.50 away from an almost four-month high above $101 hit in the previous session.
“The cold weather in the United States, Asia and even Europe has boosted momentum recently, but I don’t think prices can hold up once temperatures rise,” Tony Nunan, a risk manager at Mitsubishi in Tokyo said.
“This may be the beginning of a downward correction like the one we saw at the end of December and beginning of January when prices tanked,” he said.
US oil traded as high as $101.38 on Wednesday, the loftiest since 18 October, after data showed TransCanada’s Gulf Coast pipeline began in earnest to drain oil from benchmark delivery point Cushing, Oklahoma.
Stocks at the Cushing, Oklahoma delivery point fell by 2.7 million barrels last week, EIA data showed. Bottlenecks at the oil hub have depressed prices for the last three years.
The support for WTI narrowed the gap with Brent to less than $8 on Wednesday, the smallest since early October. The spread widened on Thursday to $8.73 a barrel.
“We still have relatively high inventory levels in Cushing. This will just transfer the problem to the Gulf coast,” Nunan said.
Total US crude stocks climbed by a higher than expected 3.3 million barrels to 361.35 million barrels for the week up to 7 February the data from the EIA showed.
Distillate inventories fell by a less than expected 731,000 barrels in the same week, the data showed.
Dwindling seasonal demand for heating oils is expected to drag on oil prices. Demand for crude is expected to decrease as refiners head into the maintenance season.
Oil prices may find some support from the potential for further supply interruptions from Libya, where protesters have shut gas and oil pipelines from the Wafa oilfield and are threatening to block another line from the larger El Sharara field.
Russia, the world’s largest oil producer, expects its output to reach 10.54 million bpd this year, a post-Soviet record high, the country’s Deputy Energy Minister said on Wednesday.