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UPDATE 3-Brent eases to $110, on track for highest weekly close in '14

David Sheppard
Friday, 21 Feb 2014 | 5:02 AM ET

* South Sudan cuts oil output to 170,000 bpd

* China and India boost imports of Iranian crude

* Coming up: U.S. existing home sales at 1500 GMT

(Rewrites throughout, updates prices, previous dateline SINGAPORE)

LONDON, Feb 21 (Reuters) - Brent crude oil slipped towards $110 a barrel on Friday but remained on course for its highest weekly close this year, as supply disruptions in Africa tighten the market.

U.S. benchmark West Texas Intermediate was heading for its sixth straight weekly rise and its discount to Brent has shrunk to the narrowest in four months, as a new pipeline helps drain supplies from WTI's delivery point at Cushing, Oklahoma.

Prices faced some pressure on signs Iran substantially increased crude oil exports to China and India in January, though total exports from the Islamic Republic remain constrained by Western sanctions.

Brent crude for April delivery was down 16 cents at $110.14 a barrel by 0938 GMT, having hit a seven-week high of $110.82 on Wednesday. U.S. crude futures for April delivery dropped 12 cents to $102.63.

Brent's premium to U.S. crude <CL-LCO1=R> narrowed to as little as $7.09 in the previous session, its tightest since Oct. 9, and was around $7.50 a barrel on Friday.

"There is more upside for WTI than Brent because of the ongoing bullish news," said Tan Chee Tat, analyst at Phillips Futures in Singapore, pointing to extreme winter conditions in the United States that are boosting demand for heating oil.

Data from the U.S. Energy Information Administration on Thursday was mixed for oil as Cushing crude stocks fell 1.73 million barrels in the week to Feb. 14, while the country's overall crude inventories rose almost 1 million barrels.

Crude stockpiles in Cushing have fallen below the five-year average, but the recent rate of stock declines was unlikely to be sustained due to a rise in domestic production, BNP Paribas analysts said in a note. Seasonal refinery maintenance in March and April will also reduce demand, they said.

A weaker U.S. dollar, which fell to a seven-week low against the euro earlier this week, has boosted demand for dollar-denominated commodities as they become more affordable to holders of other currencies.

Domestic conflicts in Libya and South Sudan, and escalating protests in Venezuela have added support to Brent prices.

South Sudan's oil production has fallen by about a third to around 170,000 barrels per day (bpd), as the capital of the main oil-producing region has been divided by the army and rebel fighters.

Maintenance at Angola's Plutonio oilfield in March will also cut supply by about 180,000 bpd.

"Renewed risks would definitely support Brent comfortably at $105-$110 a barrel," Tan of Phillips Futures said.

Traders also eyed the turmoil in Ukraine, where violence escalated sharply on Thursday between pro-European protesters and forces loyal to Russian-backed President Victor Yanukovich.

Ukrainian protesters exchanged fire with police on Friday between Kiev's Independence Square and the parliament building, a police statement said. The violence has strained ties between Moscow and members of the European Union, one of the main markets for Russia's huge oil and gas supplies.

(Additional reporting by Florence Tan in Singapore; Editing by Dale Hudson)