SINGAPORE: Brent crude steadied above $113 a barrel on Friday, holding on to most of previous session's losses and heading for the biggest weekly loss since March as investors unwound positions on reduced concerns over exports from strife-torn Iraq.
Prices have dropped about $2.50 from a nine-month high of $115.71 hit on June 19 as output from Iraq's southern oilfields - which produce most of the nation's 3.3 million barrels per day - remained unaffected by fighting in the north and west.
"The risks can't be dismissed, but the fact time has gone by suggests investors are getting nervous about the risk premium (built into Brent)," said Ric Spooner, chief markets analyst at Sydney's CMC Markets. "We might start to see some unwinding of investors' positions if Baghdad holds steady." Brent was unchanged at $113.21 a barrel by 0525 GMT after falling 79 cents in the previous session.
Brent is set for a weekly loss of 1.4 percent, the most in three months.
US crude was down a cent at $105.83 after settling 66 cents down at $105.84, the lowest settlement since June 11. It is set for a 1.4 percent weekly loss, biggest in a month. If fighting between Sunni militants and Iraq government forces is kept north of Baghdad then the chances of supply disruptions would ease, Spooner said.
Investors are still watching how the fight for control of Iraq's largest refinery, the 300,000-barrel-per-day Baiji complex, unfolds. Weaker-than-expected US consumption data was among the other factors responsible for the oil price drop, Spooner said.
US consumer spending rose less than expected in May, prompting economists to downgrade estimates for second-quarter growth, muddying the outlook for demand from the world's top consumer of oil.
Both Brent and West Texas Intermediate are expected to slide further on Friday with US crude testing technical resistance at $105.50, said Jonathan Barratt, chief executive of Sydney commodity research consultancy Barratt Bulletin.
France and Germany will release economic data later on Friday.
"There is not a lot of anything to get real juicy about," Barratt said. Weaker than expected US data this week, including an increase in oil inventories and lower GDP growth and consumer spencing, is still weighing on oil prices.
Developments in Ukraine after US Secretary of State John Kerry said Russia should call on pro-Russian separatists in eastern Ukraine to disarm within "the next hours" will give direction to energy prices. Ukraine is a key gas supply route to Europe from Russia.
Comments
Comments are closed for this article.