Brent oil hits 2-week high with South Sudan in focus
Brent crude rose to a two-week high above $111 a barrel as internal strife in South Sudan threatened the country’s oil output
Brent crude rose to a two-week high above $111 a barrel on Monday as internal strife in South Sudan threatened the country’s oil output, adding to supply woes in Africa.
South Sudan’s government said on Sunday rebels had seized the capital of a key oil-producing region. Fears grew of an all-out ethnic civil war in the world’s newest country that could cut off its 245,000 barrels per day (bpd) oil output.
This could add to the more than one million bpd of lost supply from Libya where key oil ports were shut by a group demanding greater autonomy for the country’s eastern part.
In February Brent crude edged up one cent at $111.78 a barrel by 0346 GMT after a 2.7 percent gain last week and having touched a high of $111.93 earlier in the session. U.S. crude for February delivery edged down 11 cents to $99.21 a barrel.
“You’ve lost Libyan supply and you’ll lose Sudanese supply. Although they are not large amounts, they are significant enough to make people nervous,” said Jonathan Barratt, chief executive of commodity research firm Barratt’s Bulletin in Sydney.
“The escalation of violence in Sudan will probably start to push out the Brent-WTI spread again,” he said, adding that the spread may widen back to $16. The spread CL-LCO1=R stood around $12.57 on Monday, after narrowing nearly $9 in two weeks at the start of the month.
South Sudan’s ambassador in Khartoum said on Sunday that oil was flowing normally although the country’s main investor China National Petroleum Company has evacuated its oil workers from the fields to the capital Juba.
Libya’s oil minister said on Saturday force should be used to reopen key oil ports in the eastern part of the country which have been closed for five months.
Worries about short supplies have caused the oil market’s pricing dynamics to shift, with prompt delivery oil rising above prices for future delivery, Saudi Arabia’s oil minister said on Saturday. The minister played down suggestions that the kingdom was ready to cut production.
Oil also remained supported by expectations of stronger fuel demand at the world’s largest oil consumer after the U.S. economy grew at its fastest pace in almost two years in the third quarter.
U.S. gasoline prices hit a three-month high on Friday, buoyed by refinery strikes in France and refinery glitches in the United States.
Workers voted to end a strike over pay at Total’s Donges refinery in western France on Sunday, the oil company said, though industrial action continued at three other plants.
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