Brent slips towards $107 on China data, Libyan ports

Brent’s premium over U.S. crude widened to $6.30 a barrel, after hitting $6 a barrel on Monday to match its narrowest point of the last three weeks. (File photo: Reuters)

Brent crude slipped towards $107 on Tuesday due to lacklustre manufacturing data from China and the possibility of a jump in supplies from Libya after rebels blocking eastern oil ports hinted at a deal with Tripoli.

Activity in China’s factory sector edged up in March, according to government data, which economists said was not enough to dispel concerns that the world’s second-largest economy slowed more than expected in the first quarter.

Rebels in eastern Libya may be close to reopening three oil ports, which accounted for exports of 600,000 barrels per day before they were occupied last summer, a leader from the rebels’ tribe told state media on Monday.

The comments were the most optimistic for months and came after the government met a rebel demand to release three of their fighters, but a previous deal to reopen the ports fell through in December.

At 0823 GMT Brent crude for May delivery was down 20 cents at $107.56 a barrel. U.S. crude for May delivery fell 32 cents to $101.26 a barrel.

Brent’s premium over U.S. crude widened to $6.30 a barrel, after hitting $6 a barrel on Monday to match its narrowest point of the last three weeks.

Investors also continued to keep tabs on the Ukraine crisis, which has raised fears of possible supply disruptions from Russia, the world’s second-largest oil exporter.

In a gesture that could ease tension in the worst East-West stand-off since the Cold War, Russia pulled some troops back from near Ukraine’s eastern frontier; a move the United States said would be a positive sign if it is confirmed as a withdrawal.

“The diffusion of tensions in the Ukraine crisis has already helped to reduce Brent’s risk premium to near zero, with the market tumbling from early March highs,” said Andrey Kryuchenkov at VTB Capital in London.

Traders were also cautious ahead of important U.S. unemployment numbers later this week.

“People are reluctant to take any fresh macro interpretation until we see what the U.S. unemployment data holds,” said Mark Keenan, head of commodities research in Asia at Societe Generale, referring to the non-farm payrolls data due on Friday.

“That’s going to be the major determinant for prices in the macro perspective.”

U.S. commercial crude oil stocks are expected to have continued to build last week on higher imports, despite an expected upswing in refinery runs, while inventories of refined oil products were projected to have fallen, a preliminary Reuters poll of four analysts showed.

Crude stocks are likely to have risen 2.5 million barrels on average for the week ended March 28, according to the poll.

“We’re entering into a seasonally weak period for the oil complex. Refinery runs will start to slow down, and that will weigh on prices,” Keenan said.
 

SHOW MORE
Last Update: Tuesday, 01 April 2014 KSA 12:21 - GMT 09:21
Top