LONDON: Oil headed for its third straight weekly loss on Friday as worries about supply losses in the Middle East and North Africa eased, pushing North Sea Brent crude down towards $108 a barrel.
Oil has weakened over the last month but the market remains nervous about further supply shocks.
The International Energy Agency (IEA) said on Friday that oil output remained at risk in several key producing regions.
"Supply risks in the Middle East and North Africa, not least in Iraq and Libya, remain extraordinarily high," the IEA said in its monthly Oil Market Report. "Oil prices remain historically high and there is no sign of a turning of the tide just yet." "Whether in crude or product markets, there is little room for complacency," it added. Brent was down 40 cents at $108.27 a barrel by 0850 GMT on Friday, while US crude fell 30 cents to $102.63.
Brent was heading for a loss of around 2.1 percent for the week, while US crude futures were down around 1.4 percent.
Despite the turmoil in Iraq and Libya, oil markets in many consuming centres now have ample supply.
This has helped weaken the front of the Brent futures market, with the two front months at a discount to forward contracts.
"Libyan oil production is already on the rise, and this is reflected in the structure of the Brent market," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.
Libya's southern El Sharara field is boosting production and has pushed the country's oil output to 350,000 barrels per day, a spokesman for National Oil Corp said on Thursday.
Analysts warned, however, that it would take months to ramp up production and more unrest is possible.
In Iraq, oil exports from the southern Basra ports continue, despite fighting in the north of the country but the situation in the country is fluid, analysts say.
Militants battling forces loyal to Iraqi Prime Minister Nuri al-Maliki broke into a military base in Diyala province northeast of Baghdad on Thursday, a security source and a local official said.
Investors also kept a wary eye on escalating fighting between Israel and the Palestinians in Gaza.
Beijing could implement more stimulus measures to support growth which would lift its oil demand. Chinese crude imports rose 10 percent in the first half this year although analysts attributed the rise to stockpiling.
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