SINGAPORE: Brent crude steadied near $97 a barrel on Thursday after bouncing from its lowest in 26 months, but abundant supply continued to weigh on the market.
US-led air strikes targeted Islamic State-controlled oil refineries in eastern Syria in a move to choke off a crucial source of revenue for the militant group, US officials said, and at least 14 Islamic State fighters were killed.
But the market shrugged off potential supply risks in the Middle East, focusing on the current glut. Brent for November delivery had eased 8 cents to $96.87 a barrel by 0643 GMT. It hit its lowest since July 2012 at $95.60 on Wednesday. US crude slipped 3 cents to $92.77 a barrel on Thursday.
"Geopolitical risk is a factor in the market's mind but the market is dominated by supply," said Ric Spooner, chief market analyst at CMC Markets. "Broadly speaking, there is potential for Brent to get down towards $90 a barrel before we were to start seeing OPEC doing something a bit more concrete about reducing supplies to try and defend price levels."
Last week Abdullah al-Badri, secretary-general of the Organization of the Petroleum Exporting Countries (OPEC), said he expected the group to lower its output target. But on Tuesday, United Arab Emirates oil minister Suhail bin Mohammed al-Mazroui Mazroui said it was premature to decide before OPEC meets in November.
Meanwhile, OPEC's top oil producer and the world's largest oil exporter, Saudi Arabia, pumped 9.597 million barrels of oil per day in August.
Although that was down by 408,000 bpd from around 10 million bpd in July, the amount of crude supplied to the market inched up to 9.688 million bpd in August, an industry source said. Elsewhere, Libya's oil output has climbed to 900,000 bpd, with the major El Sharara oilfield at 200,000 bpd, an official with the National Oil Corporation said.
Its production stood at 800,000 bpd earlier in the week.
US crude stockpiles fell unexpectedly last week as imports dropped to their lowest level in four months, data from the Energy Information Administration showed on Wednesday.
Crude inventories dropped 4.3 million barrels in the week ending Sept. 19, defying analysts' expectations of an increase of 386,000 barrels.
A fall in the US crude stocks suggested the United States was getting less reliant on imports, Phillip Futures said in a note.
"We expect WTI to drop for the rest of today as the US crude stockpile drop should be a short-term effect.
We need to be wary of the changes in US crude imports as this may fundamentally cause the WTI-Brent spread to narrow."
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