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Brent falls for 3rd day as Libyan rebels advance; heads towards $114

Brent falls for 3rd day as Libyan rebels advance; heads towards $114
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First Published: Tue, Mar 29 2011. 12 31 PM IST
Updated: Tue, Mar 29 2011. 12 31 PM IST
Singapore: Brent crude fell for a third day running on Tuesday as Libyan rebels gained ground against embattled leader Moammar Gadhafi, boosting expectations that supplies from the nation may be restored quicker than expected.
Rebels, emboldened by Western-led air strikes against Gaddafi’s troops, have regained control of key oil ports and advanced west. The progress comes as more than 40 governments and international organisations meet on Tuesday in London to try to lay the groundwork for a Libya without Gaddafi.
Trading volume for US crude fell on Monday to the lowest this year as Japan’s struggle to contain the world’s worst nuclear crisis in 25 years countered fears of lower crude supplies over the fighting in Libya and the unrest in the Middle East.
The uncertainty clouded the outlook for corporate earnings, weighing on US and Japanese shares.
Brent crude futures for May delivery edged down 12 cents to $114.68 a barrel by 12:02pm, after earlier falling as much as 75 cents. US May crude futures declined for a fourth day, down 5 cents to $103.93.
Brent’s premium to the US benchmark hovered near $11, after narrowing from a March 1 record above $17.
“There’s talk in the market about oil supply from Libya being restored quicker than anticipated,” said Ben Westmore, a commodities analyst at National Australia Bank.
“But we haven’t had any news that the bombings have significantly abated, so it could be a very short-term reaction.”
Qatar became the first Arab country to recognise Libya’s rebels, according to a Monday report by the Qatari state news agency, a day after a senior Libyan rebel official said Qatar had agreed to market crude oil produced from east Libyan fields that Gadhafi no longer controls.
A US Treasury official said rebels could sell Libyan crude free from sanctions imposed against transactions with Gadhafi’s government.
Ongoing fighting and concerns over U.S. and United Nations sanctions are likely to keep crimping Libya’s output, rebel leaders, oil traders and analysts said.
Supply rises
Top exporter Saudi Arabia unexpectedly called on oilfield service firms to expand its oil rig count, gearing up to boost output.
“I don’t think that has a big impact on the market in the short term,” Westmore said. “Any increase to exploration I would take as wanting to keep spare capacity” in the long term.
Saudi state-run oil giant Aramco met with leading oil service companies including Halliburton over the weekend, unveiling plans to boost the country’s rig count this year and next to 118, from around 92 now, Simmons & Co analyst Bill Herbert wrote in a research note.
To make up for lost output in Libya, members of the Organization of Petroleum Exporting Countries (Opec), including Saudi Arabia, United Arab Emirates, Kuwait and Angola, have unilaterally boosted output, the UAE’s Opec governor said.
Crude oil stocks are also likely to rise in the United States last week, keeping with seasonal trends, a preliminary Reuters survey of analysts showed.
Higher imports are expected to meet demand as refiners bring units back from maintenance, analysts said.
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First Published: Tue, Mar 29 2011. 12 31 PM IST
More Topics: Markets | Oil | Commodities | Brent | Crude |