Crude oil prices in Kuwait edged higher in February on the back of supply disruptions, particularly within Opec in addition to the geopolitical tensions, said a report.

After dropping to a seven-month low of $100 bpd early in the month, the price of Kuwait Export Crude (KEC) climbed back up to $106 bpd by February 19, stated the National Bank of Kuwait (NBK) in its report.

Brent crude prices also trended higher, rising by $4 to $111bpd. Both crudes, however, averaged only $1 higher than in January.

According to NBK, the supply disruptions and geopolitical tensions have kept oil markets relatively tight – against expectations.

Most notable have been output outages within Opec; continued insurgency in Libya has seen production collapse by more than 1 million barrels per day (mbpd) from its post-war high of 1.5 mbpd, while logistical constraints and political issues in Iraq have seen output fall back to below 3 mbpd – after peaking at 3.2 mbpd last year.

On the geopolitical front, the recent crisis in the Ukraine and the consequent Russian military intervention have caused oil prices to spike in early March amid fears of disruptions to energy supplies.

Moreover, global oil demand – especially from developed economies – has been robust, stated the top Kuwaiti bank in its review.

US demand, in particular, has been supported by unusually cold weather and declining oil stocks – new pipeline capacity has allowed more oil to flow from the oil stocks at Cushing.

Going forward, oil markets are expected to ease slightly on expectations of large increases in non-Opec supplies. Coupled with a possible recovery in Opec production, prices could begin to come under increasing downward pressure through 2014.

Crude output of the Opec-11 (excluding Iraq) increased for the second consecutive month, rising by 0.417 mbpd to a four-month high of 28.1 mbpd, according to data provided by ‘direct communication’ between Opec and national sources, said the NBK report.

This was led primarily by a recovery in output from both Libya and Nigeria, of 280 kbpd and 215 kbpd, respectively, it added.-TradeArabia News Service