SINGAPORE: Brent crude held steady above $109 a barrel on Tuesday, as unrest and low output in OPEC-producer Libya offset downwards pressure on prices from expectations of a build in weekly U.S. crude stocks to a record high.
Libyan oil output was capped at 210,000 barrels per day (bpd), far below the 1.4 million bpd produced through mid-2013, with major western oilfields, El Sharara and El Feel, still shut a week after the government said it reached a deal with protesters to reopen them.
"Whatever happens in Libya at the moment shouldn't really matter, basically because things can't get much worse than they are," said Jonathan Barratt, chief executive of commodity research firm Barratt Bulletin in Sydney.
Brent crude was up 15 cents at $109.52 a barrel at 0658 GMT, after settling 38 cents lower.
U.S. crude for June delivery was 6 cents higher at $102.67 a barrel. The contract, which closed 59 cents up, expires on Tuesday.
U.S. crude for July delivery was 14 cents higher at $102.25 per barrel.
French oil major Total said on Monday it cut its presence in capital Tripoli to a minimum over security concerns, while Algerian state energy firm Sonatrach is evacuating workers from the country, following clashes in Libya over the weekend.
"None of this bodes well for restoring Libya's oil output to prewar levels and we contend that the country will remain a phantom menace, hanging over the oil markets for at least the remainder of 2014," Barclays analysts said in a note.
RECORD HIGH U.S. STOCKS
U.S. commercial crude stocks were expected to have risen by a million barrels in the week to May 16, a preliminary Reuters poll of four analysts showed.
That would take crude inventories to a new record after inventories hit 399.4 million barrels in the week to April 25, the highest since the U.S. Department of Energy's Energy Information Administration (EIA) began collecting data in 1982.
The poll was taken ahead of weekly inventory reports due later on Tuesday from industry group the American Petroleum Institute (API) and on Wednesday from the EIA.
"The summer driving season could provide some support, but the economies aren't yet showing substantial growth in consumption," said Barratt.
"I don't think there's a lot out there that can force prices either way. I think we're stuck in this range for some time."
The Ukraine crisis continued to support oil prices, after NATO and the United States said they saw no sign of troop movements following a Kremlin announcement that President Vladimir Putin had ordered Russian forces near Ukraine back to their bases.
Europe's Energy Commissioner said on Monday progress had been made in the gas price dispute between Russia and Ukraine after talks with Russia's energy minister and Gazprom. A new round of negotiations is scheduled for May 26.
In Norway, Statoil shut oil production at its Snorre B platform in the North Sea and evacuated a quarter of the personnel there after an oil leak.
Output at Snorre field's two production platforms averaged 88,000 bpd last year, data from Norwegian Petroleum Directorate (NPD) showed.
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