LONDON: Brent crude oil futures drifted further below $103 a barrel yesterday as a strong dollar and plentiful supplies continued to pressure prices.
October Brent crude was down 20 cents to $102.43 a barrel by 1342 GMT. US crude was down 64 cents at $93.32 a barrel.
Traders and analysts said the market appeared to be pausing after hefty sell offs that have driven Brent to its lowest level since June 2013.
“We’ve reached a stage where the market is looking to stabilise a bit,” said Ole Hansen, senior commodity strategist at Saxo Bank. “But we are still in a downward trend, as supply is rising.”
“We are in a sideways range and we will break out of this to the downside,” said Christopher Bellew, an oil broker at Jefferies in London. “There is oversupply, and that is demonstrated by the contango going out to April 2015.”
A contango describes a market structure where barrels trade more cheaply on the spot market than those for delivery at future dates. ICE Brent futures reflect this, with the October contract trading at a 74-cent discount to the November contract
Hansen pointed to Libya, which is gradually increasing its oil production after reopening several eastern ports. It has loaded a second tanker at Es Sider, its largest oil export terminal, after being shut for a year.
Libya’s oil production, although still below levels of about 1.4 million barrels per day (bpd) a year ago, has risen to 612,000bpd. This is well above the lows of 100,000bpd seen earlier this year.
In addition, exports from Iraq remain near record volumes despite the Islamic insurgency in the north. Crude is also being exported from Iraqi Kurdistan via Turkey in defiance of Baghdad.
The shale oil boom helped the United States pump the most oil in a month in 28 years in July, sending crude imports to 19-year lows, industry group American Petroleum Institute said on Thursday.
“The oil that is no longer being imported into the US is flooding the world market instead and generating pressure on prices there,” said Carsten Fritsch, an oil analyst at Commerzbank.
REUTERS
