17 June 2013, News Wires – Brent crude futures traded below $106 a barrel on Monday, as worries over bulging US inventories and soft global demand forecasts overshadowed supply concerns tied to Middle East tensions.
The European benchmark ended last week at its highest since 9 April, after hitting an intraday high of $106.64 on worries over Middle East tensions and despite a grim global oil demand outlook by the International Energy Agency, IEA, Opec and the US Energy Information Administration.
Brent crude eased 5 cents to $105.88 a barrel early on Monday, while U oil dropped 13 cents to $97.72 a barrel.
The oil market was also cautious ahead of the US Federal Reserve meeting starting Tuesday. Investors are eyeing whether Chairman Ben Bernanke’s media briefing will give more clarity on how and when the central bank will scale down its massive stimulus programme.
“The retreat in the US dollar leading into the Fed meeting has given oil traders some impetus to push through resistance levels,” said the Sydney-based Ric Spooner, chief market analyst at CMC Markets.
Brent faces a zone of technical resistance around $106.50-$106.70, Spooner said.
“As you can clearly see fundamentals are not supportive of the jump on Friday, the market will now need to see a catalyst like a supply disruption as a result of Middle East tensions, or a further weakening of the dollar for whatever reason,” he added.
Syria will be a key talking point between US President Barack Obama and Russia’s Vladimir Putin on Monday, as both seek to find common ground in bringing Bashar Assad to the negotiating table to end the two-year civil war.
Late last week, Washington angered the Kremlin by authorising US military support for the Syrian rebels opposed to Assad. Russian President Vladimir Putin called Assad’s foes flesh eating cannibals.
Syria is not key to global oil supply, but investors are worried the civil war there could drag in other countries and plunge the whole region into conflict.
Investors are also watching to see if Iran’s Hassan Rohani, who defeated hardline rivals in Iran’s weekend presidential elections, will have any immediate impact in resolving a dispute with the UnS over Tehran’s nuclear ambitions that has led to Western sanctions squeezing its oil exports.