Recent weak economic data from the US has also dampened the outlook for fuel demand in the world’s largest oil consumer.
February Brent crude had edged down 10 cents to $106.65 a barrel early on Tuesday after closing down 0.47% in the previous session. US crude for February delivery was at $91.85, up 5 cents after settling at a two-session low on Monday.
“Oil markets seem to have weakened in the last few days because of lower US economic indices like employment data and a rise in oil exports from Libya,” said Ken Hasegawa, a commodity sales manager at Newedge Japan.
Major powers and Iran have also moved a step closer to resolving a long standoff over Tehran’s nuclear ambitions after endorsing a deal that will come into force on 20 January.
The parties are likely to start talks on a final settlement in February, a diplomatic source said on Monday.
A resolution to the issue could see western powers lifting sanctions on the Opec producer’s oil exports, increasing global supply.
Libya’s production has also risen to 600,000-650,000 barrels per day , with output at the El Sharara field back up to 300,000 bpd, its oil minister said. Wrecked by months of domestic protests, the Opec producer’s output is still below the 1.2 million bpd it was producing in July.
Britain’s biggest oilfield, Buzzard, where an outage last week temporarily boosted Brent, is expected to return to normal output in coming days, its operator Nexen confirmed on Monday.
“There are no positive factors to buy oil except if you are short-covering or bargain-hunting,” Hasegawa said, adding that Brent and West Texas Intermediate (WTI) were supported on technical charts at $106 and $91.20-$91.30 respectively.
Prices could come under further pressure if oil product stockpiles rose in the US last week, reinforcing concerns of lower demand after it posted the weakest monthly job growth in three years in December, Hasegawa said.
Analysts in a preliminary Reuters poll said US crude inventories likely rose last week for the first time in seven weeks, up by an average of 500,000 barrels.
In the refined products sector, distillate stocks, which include heating oil and diesel fuel, were forecast to have risen 1.6 million barrels on average, while gasoline stocks were seen to have increased by 2.7 million barrels last week, the poll showed.