Singapore: Brent futures held around $108 a barrel on Friday, as uncertainties surrounding the global economic outlook weighed on prices, while a showdown between Israel and the Palestinians stoked worries about supply.
Oil investors are worried that Arab producers may be drawn into any possible Israeli-Palestinian conflict, which may hurt their supply lines. Brent has held above $100 for most of this year on fears of disruption from the Middle East with a weak demand outlook capping further gains.
Brent crude slipped 1 cent to $108 a barrel by 08:30 am. The December contract, which expired on Thursday, settled up $1.37 and the more actively traded January dipped 47 cents. US oil rose 3 cents to $85.48.
“The global economy has got issues and geopolitical tensions, particularly in the Middle East, are rising,” said Jonathan Barratt, chief executive of Barratt’s Bulletin, a Sydney-based commodity research firm. “That means a status quo for the oil market for some time.”
Barratt expects the US contract to be at around $93 a barrel by the end of the year and Brent at $115.
An oil market trading in a tight range may be good for the global economy struggling to revive growth because that would mean stable prices of a key input, Barratt said.
“People aren’t chasing it, people aren’t selling - and that means a stable primary input price,” he said.
Brent may consolidate in a range of $107.39-$108.20 per barrel for one trading session before seeking its next direction, while signals are mixed for US oil as the drop on Thursday has disrupted a rebound from the 7 November low of $84.05, according to Reuters technical analyst Wang Tao.
US crude inventories rose last week while gasoline and distillate stockpiles fell along the East Coast where the fuel distribution system was still recovering from Hurricane Sandy, the US Energy Administration said.
Crude stockpiles in the world’s largest consumer rose nearly 1.1 million barrels in the week to 9 November, below estimates for a build of 1.9 million barrels. Overall US distillate stockpiles fell by 2.54 million barrels, compared with forecasts for a 1.3 million barrel drawdown. Reuters