UPDATE 5-Brent falls, U.S. oil hits 4-month low on high supplies

Anna Louie Sussman
Tuesday, 5 Nov 2013 | 11:54 AM ET

* Forecasts for US crude stocks to gain 1.8 mln bbls

* U.S. GDP data eyed for clues on Fed's stimulus plans

* New Libya unrest, Egypt tensions support oil prices

(Updates prices; changes byline and dateline, previous LONDON)

NEW YORK, Nov 5 (Reuters) - Brent crude oil fell on Tuesday after hitting a four-month low the previous session, while U.S. crude futures notched a fresh four-month low on expectations of a seventh straight build in domestic supplies.

Rising U.S. oil stocks have kept prices under pressure in recent weeks and are expected to show a new weekly increase of around 1.8 million barrels, according to a Reuters poll ahead of reports from industry group the American Petroleum Institute (API) and the Energy Information Administration (EIA).

Stocks at Cushing, Oklahoma, the delivery point for U.S. benchmark futures, rose by more than 2 million barrels, the largest build since December 2012, in the week ending Oct. 25.

A Tuesday report from the Institute for Supply Management (ISM) showed U.S. service-sector business activity picked up in October and firms took on workers despite a partial government shutdown. The report renewed speculation over when the Federal Reserve might begin to taper its current stimulus program.

"I think the ISM number would suggest more tapering from the Fed," said Phil Flynn, an analyst at the Price Futures Group in Chicago, Illinois.

"Do you really want to be long oil as you're facing potential record supplies, uncertain demand and a higher dollar?"

Brent crude fell 48 cents to $105.75 a barrel by 11:24 a.m. EST (1624 GMT) after hitting a four-month low of $105.13 overnight. U.S. oil fell $1.01 to $93.61 a barrel, after posting a fresh four-month low of $93.45.

Investors are looking for important data from the U.S. later this week, including gross domestic product (GDP) and payrolls numbers, to offer a clearer view of the outlook for demand in the world's biggest oil consumer.

The data could also give clues on when the Fed may start to roll back its monetary stimulus, which would reduce the supply of dollars and make dollar-denominated assets such as oil more expensive for holders of other currencies.

Comments by top Fed officials overnight suggested that a cut-back in the stimulus was not imminent.


Renewed tensions in Libya and Egypt offered some support to prices.

Heavy shooting erupted early on Tuesday in Tripoli, the latest unrest in the OPEC producer that highlights the government's inability to control militia groups.

"The shoot-out in Tripoli shows that Libya remains far from secure, but the market remains more focused on the possibility of a recovery in Libyan output than the ongoing unrest, with the failure to rally on bullish news reinforcing the current bearish sentiment," Citi Futures energy analyst Timothy Evans wrote in a research note.

Recent protests and strikes at ports and oilfields had already knocked Libyan crude production down to some 10 percent of its capacity of 1.25 million barrels a day.

"Libya will be up and down and will average 500,000 to 700,000 barrels per day for the next few months," Global Insight analyst Simon Wardell said.

The government has been trying to reopen eastern oil ports and fields blocked since summer by militias and tribes demanding a greater share of power and oil wealth.

Tensions in Egypt, where ousted president Mohamed Mursi went on trial and could face a death sentence, also supported oil.

(Additional reporting by Ron Bousso and Manash Goswami; Editing by Jane Baird, Keiron Henderson and Chris Reese)