Brent Crude Falls Below US$104

Posted by George Backwell
Thursday, August 14, 2014
HFO: File image

Brent crude fell below $104 a barrel on Thursday, after briefly bouncing off a 13-month low the previous day, on ample supplies and concerns about weak demand despite the ongoing political turmoil in Iraq and Ukraine.

* Ample supplies keep pressure on oil prices
* Exports from Libya's Ras Lanuf resume
* Coming up: U.S. weekly jobless claims - 1230 GMT

Oil exports from Libya's Ras Lanuf port have resumed after a year of blockades by armed protesters, while U.S. crude stocks unexpectedly rose last week.

September Brent crude fell 48 cents to $103.80 a barrel by 0655 GMT. The contract, expiring on Thursday, fell to $102.37 on Wednesday, its weakest since July 2013.

U.S. crude was down 46 cents at $97.13 a barrel.

"The supply outlook has been pretty rosy. OPEC production has been pretty good. Supply in Iraq is unaffected," said Phin Ziebell, economist at the National Australia Bank (NAB).
"The situation in the North is desperate but the reality is the majority of the crude production is concentrated in the South of the country," Ziebell said of Iraq.

Thousands of civilians are currently under siege from Sunni militant fighters and a team of U.S. military and aid personnel have landed on Iraq's Mount Sinjar to assess how to evacuate them.

The European Union is also looking into how it could tighten sanctions to stop Islamic State militants from selling oil from fields they have overrun in Syria, a European diplomat said on Wednesday.

LOSSES SEEN CAPPED
U.S. crude inventories rose by 1.4 million barrels last week, data from the Energy Information Administration (EIA) showed on Wednesday, against analysts' expectations for a 2 million-barrel drop.

Crude oil output by the world's top oil consumer is expected to go higher, with the EIA raising its estimate of U.S. crude production forecast for this year to 8.5 million barrels per day (bpd) compared to a previous estimate of 8.42 million bpd.

Next year's output is estimated to be 9.3 million bpd from 9.27 million bpd previously, representing the highest annual average level of production since 1972.

Wednesday's data from China, which included a 6 percent fall in its July implied oil demand from June, added to weak sentiment.

But while supplies are expected to stay high in the short term, losses in crude oil prices will be capped as oil was seen to be oversold, said Avtar Sandu, senior manager for commodities at Phillip Futures.

By Seng Li Peng

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