Brent slips towards $107, off 3-month top
Singapore, July 9, 2013
Brent crude dropped towards $107 a barrel on Tuesday as investors locked in profits after prices climbed to a three-month top in the previous session and as worries about supply for the Middle East eased.
Libya's major Sharara oilfield will resume operations after an agreement was reached with the armed group that shut it down last month, while a pipeline from Iraq to the Turkish port of Ceyhan will start operations in two to three days following an interruption caused by a leak.
Brent slipped 33 cents to $107.10 by 0351 GMT, after slipping to a session low of $106.90 earlier and off Monday's peak of $108.04. US crude fell 14 cents to $103.00, recovering from a low of $102.71.
"The prices have tracked so much higher in the past few weeks because of firstly the Syrian civil war escalation and then the Egyptian crisis," said Vyanne Lai, an economist at National Australia Bank.
"So oil prices have built up to a point that, unless there are more major news about intensifying Middle East conflicts, you're likely to see some form of correction."
Oil prices posted their biggest weekly gain in a year last Friday, supported by worries that mounting tensions in Egypt could disrupt traffic through the Suez Canal, via which a major portion of the world's oil is shipped.
But some of these worries have eased as Egypt's interim head of state has set a speedy timetable for elections to drag the country out of crisis, after the military ouster of Islamist President Mohamed Mursi last week sparked a wave of bloody protests.
The US dollar resumed gains after slipping off three-year highs against major currencies earlier, which also weighed on oil prices. A strong dollar makes commodities priced in the greenback more expensive for holders of other currencies.
Investors are now eyeing data from China, the world's No.2 oil consumer, that could show growth in the world's second-largest economy grinding towards a 23-year low, according to a Reuters poll.
China's annual consumer inflation accelerated more than expected in June to 2.7 per cent as food costs soared, data showed on Tuesday, limiting room for the People's Bank of China to loosen policy to underpin the slowing economy.
"The 2.7 per cent is still generally a benign number when in 2010 it went up to much more than that, so I wouldn't think it's something to herald about as fundamentally the Chinese economy is slowing and industrial data recently pointed out to contracting manufacturing and industrial production," Lai said.
But oil could draw some support from an expected drop in US commercial crude stocks in the seven days to July 5 due to lower imports and higher refinery activity, a Reuters poll of seven analysts showed on Monday.
The poll, taken before weekly inventory reports from the American Petroleum Institute and the US Energy Information Administration, forecast that crude stocks fell 3.3 million barrels on average last week. - Reuters