London: Brent crude dipped slightly on Friday, hampered by gloom surrounding prospects for the global economy, but it outperformed other commodities as it was supported by tight supply in Europe and the United States.
Brent for October delivery was down 9 cents at $114.46 by 2:18pm. It was still on track to gain about 2% this week.
US crude oil fell 58 cents to $88.47 a barrel and was set for a gain of more than 3% this week.
Other commodities like copper and risk sensitive equities fell more sharply as US Federal Reserve chairman Ben Bernanke gave no steer on new stimulus measures.
US President Barack Obama’s proposed $447 billion package of tax cuts and spending plans aimed at boosting growth and job creation failed to restore confidence to jittery markets.
A series of outages in North Sea oilfields, used to set the global Brent benchmark, have led to two cargoes being dropped from September’s loading schedule.
Violence in North Africa and the Middle East is also having a significant impact on supply.
“There is tightness in the market, with the North Sea outages, the embargo of Syria limiting oil coming into Europe and with the problems in Libya,” Andy Sommer, senior energy analyst at ELG in Deitikon, Switzerland said.
In Libya, the man tasked with running the country, interim Prime Minister Mahmoud Jibril, reminded his forces that the war was not over yet as the latest deadline for the surrender of pro-Muammar Gaddafi towns loomed and fighters massed on both sides.
“The consensus is that with the Libyan civil war essentially over, market pressures are easing, but the reality is that we are at the peak point of Libyan stress -- without crude production, but with high imports to meet internal fuel needs,” analysts at JP Morgan said in a research note.
Weak supply in the United States also acted as a support for oil. The US Energy Information Administration said commercial oil inventories fell nearly 4 million barrels last week, far deeper than the forecast for a 1.9 million barrel drawdown.
Oil also found support from the busy 2011 hurricane season in the Atlantic.
Tropical Storm Nate, the 14th named storm, was gaining strength and could become a hurricane on Friday or Saturday, the US National Hurricane Center said.
The storm has prompted producers in the Gulf of Mexico to begin another round of evacuations of nonessential workers.
G-7 finance chiefs meet later on Friday, with the faltering global recovery and Europe’s problems likely to be the issues of the day.