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Markets

Brent above $111 as Irene weakens, dollar slides

LONDON : Brent crude steadied around $111 on Monday as the dollar weakened and after a hurricane swept up the US east
29 Aug 2011

 LONDON: Brent crude steadied around $111 on Monday as the dollar weakened and after a hurricane swept up the US east coast, with no reports so far of serious damage to refiners and terminals.

Brent crude was down 28 cents at $111.08 a barrel as of 0900 GMT, after slipping as low as $110.53. US crude gained 5 cents to $85.42.

Fears of possible disruptions to US oil supplies from weather damage helped support prices at the end of last week, but tropical storm warnings for the US east coast have now been discontinued, the US National Hurricane Center said.

"With the Fed and the hurricane headlines fading, investor concern should shift to more intractable issues, such as slowing global macro trends and European debt issues," said Edward Meir, senior commodities analyst at brokers MF Global.

"We think energy markets will likely be mildly on the defensive over the next few days as some of the events that have lent a measure of support are now behind us," he added.

Seven refineries with a total of 1.23 million barrels per day capacity -- 73 percent of the 1.7 million bpd total in the US Northeast -- had been in the storm's projected path.

Hurricane Irene, which was downgraded to a tropical storm on Sunday, has left at least 15 dead, as many as 3.6 million customers without electricity and thousands of downed trees.

Brent and US crude grades moved in opposite directions as traders punted on their price differential to widen further on differing fundamental outlooks, analysts said.

The Brent-WTI spread for October was at $25.70 a barrel. It hit a record of almost $27 earlier this month.

LIBYA

Libyan rebel forces were converging on Muammar Gaddafi's hometown of Sirte on Monday, hoping to deliver the coup de grace of their revolution but uncertain whether the strongman was holed up there.

Libya's battered oil towns are struggling to get back to work after months of back-and-forth clashes. Rebel authorities have asked oil workers to return to their jobs to get the country's economic lifeline flowing again.

Analysts say limited production of Libyan crude oil could resume within a few weeks, although the country may not get back to its pre-civil-war output of 1.6 million barrels per day (bpd) for up to three years.

US crude benefited from comments by US Federal Reserve Chairman Ben Bernanke leaving open the possibility of further action to stimulate the world's biggest economy.

The US central bank's policy panel will meet for two days next month to discuss its options to provide additional monetary stimulus, among other topics, Bernanke said on Friday.

But the chairman stopped short of announcing any new stimulus measures. The potential of stimulus measures weighed on the dollar.

Stock markets also found some support from Bernanke's comments.

Market participants will be watching a slew of economic data out of the US this week for further insight into the health of the world's biggest economy. Key will be non-farm payroll data for August on Friday.

 

Copyright Reuters, 2011