LONDON: Brent crude oil fell to a two-week low on Friday, slipping towards $105 a barrel as oversupply in the Atlantic basin and low demand outweighed worries over political tensions in the Middle East, North Africa and Ukraine.
Analysts say they expect global oil production to exceed demand this year and a supply glut has already built up in the West African and European markets.
Worries over geopolitical risks to oil supply have eased despite escalating violence in parts of the Middle East and North Africa. "Additional oil from Libya, the fact that initial fears of supply interruptions have faded, a stronger dollar and concerns about stalling oil demand especially from China have been the bear factors at work eroding prices," said David Hufton, managing director of brokerage PVM Oil Associates.
Oil prices remained steady as US job growth slowed more than expected in July. Non-farm payrolls increased 209,000 last month, less than expected, after surging by 298,000 in June, the Labor Department said on Friday.
Brent crude fell to a low of $105.10, its weakest since July 15 and was down 80 cents at $105.22 a barrel by 1440 GMT.
Brent lost 5.6 percent loss last month, its biggest fall since April 2013.
US crude futures fell 85 cents to $97.32 a barrel, following 6.8 percent decline last month, the biggest monthly loss since May 2012.
US crude slipped more than a dollar to an intraday low of $97.09 earlier in the session, its lowest since February, after the closure of a refinery in Kansas.
The outage at Coffeyville refinery, a major crude consumer, could last up to four weeks, according to its operator.
"There is also an overhang of light-sweet crude in the Atlantic Basin in line with the low crude intake levels and higher availability of US and Canadian crude imports," JBC analysts said in a report to traders.
The front of the Brent futures price curve is trading at a heavy discount to later barrels in a formation known as a contango.
This discount has now lasted longer than any since early 2011, Morgan Stanley analyst Adam Longson said. "(This reflects) weak physical demand and an oversupplied Atlantic Basin," Longson said.
"By fourth quarter, we expect to see a more balanced global crude market."
Oil investors say they are less worried now than a month ago about the risk to oil supplies from conflicts and civil turmoil despite heavy fighting in many countries.
OPEC's second largest producer, Iraq, is battling an insurgency in the north and west.
The conflict threatens to split the country, but has yet to have an impact on near-record oil exports from the south.
Baghdad is also embroiled in a dispute with Iraqi Kurdistan over oil exports via Turkey.
In Libya, oil output remains around 500,000 barrels per day (bpd), down from 1 million bpd in 2012, following weeks of clashes between rival militias.
Energy investments in Russia also faced delays after sanctions imposed by the United States and European Union limited access to funds.
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