Brent crude heads for weekly decline on ample supply

A general view shows an oil refinery in Zawia, 55km west of Tripoli. Exports from Libya plummeted this year as political strife and labour protests shut oil fields, refineries and ports. — Reuters pic
A general view shows an oil refinery in Zawia, 55km west of Tripoli. Exports from Libya plummeted this year as political strife and labour protests shut oil fields, refineries and ports. — Reuters pic

NEW YORK, Sept 26 — Brent crude headed for a third weekly loss this month amid speculation that plentiful oil supplies will buffer the market from unrest in the Middle East. West Texas Intermediate was steady in New York.

Futures were little changed in London, down 1.5 per cent this week. The broadest Arab-US military coalition since the 1991 Gulf War struck Islamic State targets in Syria, while in Iraq, fighting has largely spared the south, home to three quarters of supply from OPEC’s second-largest crude producer. Libya’s output has risen to 925,000 barrels a day, according to National Oil Corp.

“Although the conflict in Syria hasn’t been completely solved, it looks like the issues are now having less impact on crude prices,” Will Yun, a commodities analyst at Hyundai Futures Co in Seoul, said by phone today. “With ample supplies, we may see a further decrease in prices.”

Brent for November settlement was at US$97.05 (RM317) a barrel on the ICE Futures Europe exchange, up 5 cents, at 12:05pm Singapore time. The contract gained 5 cents yesterday. The volume of all futures traded was about 55 per cent below the 100-day average. Prices have slid 12 per cent this year.

WTI for November delivery was 2 cents higher at US$92.55 a barrel in electronic trading on the New York Mercantile Exchange. It fell 27 cents to US$92.53 yesterday. The US benchmark crude was at a discount of US$4.47 to Brent, compared with US$6.74 at the end of last week.

Gasoline in New York dropped as much as 1.5 cents, or 0.6 per cent, to US$2.703 a gallon on Nymex. Futures increased 2 per cent to US$2.718 yesterday, the highest close since August 29.

Syria, Iraq

Brent and WTI are down for a third month and poised for the biggest quarterly loss since June 2012. Aircraft from the US Saudi Arabia and United Arab Emirates on September 24 attacked 12 modular oil refineries in eastern Syria controlled by Islamic State, US Central Command said in an e-mailed statement. The coalition also included Bahrain, Jordan and Qatar.

In Iraq, more than 190 US strikes that began last month have contributed to militants abandoning some territory seized in June, according to data from the Pentagon. The UK may begin bombing within days if the House of Commons approves military action after being recalled for an emergency vote today, said a government official.

Libyan supply

In Libya, a field operated by Wintershall AG contributed to the expansion in output, Mohamed Elharari, a National Oil spokesman, said by phone from Tripoli yesterday. The Organisation of Petroleum Exporting Countries member is seeking to sustain a production recovery after a year of unrest.

WTI has technical resistance along its 30-day middle BOLLINGER BAND , data compiled by Bloomberg show. Crude halted climbs since last week near this indicator, at about US$93.70 a barrel today. Sell orders tend to be clustered around chart- resistance levels.

Futures may advance next week, according to a Bloomberg News survey. Eleven of 26 analysts and traders, or 42 per cent, predict prices will rise through October 3, while six respondents forecast a decline. — Bloomberg