Brent stays above $109 after China data

But signs that Libya may resume exports dragged on prices

Oil’s support from geopolitical tensions in the Middle East and Africa has eased.

Oil’s support from geopolitical tensions in the Middle East and Africa has eased.


Brent crude held above $109 a barrel today as upbeat data from China kindled hopes for better demand from the world’s second largest oil consumer, but signs that Opec producer Libya may resume exports dragged on prices.

Activity in China’s manufacturing sector hit a four-month high in August as new orders rebounded, a preliminary survey showed. This added to promising reports for July ranging from factory output, exports to retail sales, reinforcing signs of stabilisation in the world’s number two economy.

“This is a good sign. Commodity prices should bounce from these levels,” ANZ analyst Natalie Rampono said, but added that prices would be pressured if an expected roll back in the US Federal Reserve’s stimulus next month comes to pass.

“We’re expecting a 70 per cent chance for the Fed to start tapering in September,” Ms Rampono said. “That should have a negative impact, in particular, on US crude.”

Brent crude edged down 21 cents to $109.60 a barrel by 0506 GMT. US crude was unchanged at $103.85, after dropping by as much as 32 cents earlier in the session.

Losses in the US benchmark were partly driven by signs that companies were diverting oil to the depleted Cushing, Oklahoma storage hub for the first time in 12 months. The Brent-WTI spread widened to more than $6 for the first time since June yesterday.

Oil’s support from geopolitical tensions in the Middle East and Africa has eased just a touch, Ms Rampono pointed out.

Libya’s Marsa al Brega port, which local sources said reopened on Tuesday, may handle oil cargoes in the next few days, a shipping source close to the trade said.

But the worst disruption to Libya’s oil sector since the civil war of 2011 continued, with the largest terminals, Es Sider and Ras Lanuf, still blocked by protesters for nearly four weeks.

A political crisis in Egypt has also stoked supply worries as the country is home to the Suez Canal and the Sumed pipeline, which together carry around 4.5 million barrels per day of oil between the Red Sea and the Mediterranean.

The Egyptian army has said it will guarantee the safety of the canal and pipeline but any disruption could have a major impact on oil prices.

For now, prices are not expected to see much of an upside from the geopolitical worries, Ms Rampono said.

“Markets have factored in production cuts from Libya and there’s no issue of exports disruption at the Suez Canal.” (Reuters)

Sign In

Forgot Password?

Sign Up

The name that will appear beside your comments.

Have an account? Sign In

Forgot Password?

Please enter your email address so we can send you a link to reset your password.

Sign In or Sign Up

Thank you

You should receive instructions for resetting your password. When you have reset your password, you can Sign In.

Hello, .

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

Thank you for registering. Please check your email to verify your account.

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.