GO
Loading...

UPDATE 8-Oil slightly higher as Libya, Fed support; Iran weighs

Jeanine Prezioso
Friday, 15 Nov 2013 | 1:39 PM ET

* Dovish Yellen comments support oil

* U.S. crude weighed down by bulging stockpiles

* IEA says market well supplied in short term

(Adds analyst comment, updates prices)

NEW YORK, Nov 15 (Reuters) - Oil futures were moderately higher in choppy trading on Friday supported by Libyan supply outages and supportive comments from the Fed chair nominee, but gains were limited by reports that a deal with Iran may be near on its nuclear program.

Both Brent and U.S. oil prices fell earlier on the reports that a senior U.S. official said a deal with Iran on its nuclear program was "quite possible" next week when world powers meet in Geneva.

Sanctions against Iran because of its nuclear program have kept some 1 million barrels of oil off the global market. Any agreement among nations could mean sanctions will be lifted, increasing market supply and depressing prices.

Brent crude was 9 cents higher at $108.37 at 1:23 p.m. EST (1823 GMT) after trading as high as $108.65.

Brent looked set for a weekly gain of 3 percent as supply outages in Libya and comments from President Barack Obama's nominee to lead the Fed supported prices.

U.S. crude was up 19 cents per barrel to $93.95 after trading up to $94.55. The contract was on track for its sixth straight week of losses as supplies remain high.

U.S. crude prices were trying to "develop a little bit of a base," said Tariq Zahir, managing member of commodity fund Tyche Capital Advisors in Laurel Hollow, New York.

"There's nothing out there right now that could sustain higher prices over the long run," he said.

The discount of U.S. Gulf Coast cash gasoline prices to gasoline futures narrowed following news of a fire that caused one death at Chevron's 330,000 barrel-per-day refinery in Pascagoula, Mississippi. There was minimal impact to the actual gasoline futures price.

U.S. gasoline futures were last trading less than 1 percent lower at $2.6664 a gallon.

FED AND LIBYA SUPPORT, SUPPLY WEIGHS

Janet Yellen, likely to be the next Fed chief, defended the U.S. central bank's commodity-friendly economic stimulus measures, suggesting that any tapering would not be imminent under her watch.

The market was beginning to "show signs of support on Fed policies" but was still "stabilizing," said Gene McGillian, analyst with Tradition Energy in Stamford, Connecticut, of the choppy trading.

While her comments provided a boost to risk appetite, with most commodities and equities scaling higher, big stockpiles kept U.S. crude in check.

The market is anticipating refiners returning from seasonal maintenance to draw down high crude oil stocks after government data showed supplies rose by more than double the forecast last week.

Brent's premium to U.S. oil futures <CL-LCO1=R> was more than $13 per barrel after reaching an eight-month high of $15.87 on Thursday.

The International Energy Agency said that while oil markets look well supplied in the short term, prices could rise in the next few months due to a seasonal increase in demand and output disruptions in some OPEC nations such as Libya and Iraq.

Libyan oil output is down to a fraction of its capacity of 1.25 million barrels a day. Protests at oil ports have cost Libya more than $6 billion and started hitting power supplies in the North African country.

On Friday, some 13 people were killed and more than 130 wounded in clashes in Tripoli, according to the Libyan state news agency.

In Iraq, the government has moved swiftly to restore calm at its giant southern oilfields following violent protests. Schlumberger Ltd, the world's top oil services company, is expected to return to work next week at Iraq's biggest field, Rumaila.

(Reporting by Jeanine Prezioso; Additional reporting by Peg Mackey in London and Jacob Gronholt-Pedersen in Singapore; Editing by Dale Hudson, David Evans, John Wallace and Bob Burgdorfer)