UPDATE 1-Brent steady above $110 as economic growth, Libya support

Fri May 23, 2014 1:54am EDT

Related Topics

* Brent not far off 2-1/2-month peak hit on Thursday

* U.S., Chinese data supports oil demand prospects

* Libya's Brega port shut by protesters (Adds analyst quote; updates prices)

By Jacob Gronholt-Pedersen

SINGAPORE, May 23 (Reuters) - Brent crude held steady above $110 a barrel on Friday, set for a second straight week of gains, supported by conflicts in Libya and Ukraine as well as by positive economic data in the world's top two oil consumers, the United States and China.

A recent rally in oil prices, which pushed Brent to a 2-1/2-month peak just above $111 on Thursday, could gain momentum as Asian shares edged up to one-year highs on Friday on signs of improving growth in the world's biggest economies.

Brent crude was up 1 cent at $110.37 a barrel by 0547 GMT. The contract settled 19 cents lower on Thursday, after touching earlier $111.04, the highest since March 4.

U.S. crude gained 5 cents to $103.79 a barrel after settling 33 cents lower, but was still on course for its third weekly gain on the back of a steep drop in U.S. oil inventories last week.

"Brent managed to break through its previous high of $110.60, so I think there is scope for further gains over the coming week," said Ken Hasegawa, commodity sales manager at Newedge Japan.

"But the contract faces solid resistance around $113 and should begin to come back down again," he said.

Positive U.S. and Chinese manufacturing data released on Thursday provided support by boosting optimism for future oil demand growth. Manufacturing growth in the United States picked up to a three-month high in May, while China's factory sector turned in its best performance this year in May.

The data failed to lift prices substantially in a market driven by geopolitical factors and falling crude inventories.

"Mostly stronger data in the United States and China failed to support energy markets, although with tighter inventories expected in the coming months, momentum remains positive," analysts at ANZ said in a note.

LIBYA PORT SHUT

Oil prices were also supported by new supply disruptions in Libya. Protesters shut the headquarters of the company running the Brega oil port, the only eastern port to have remained open throughout most of the government's nine-month stand-off with a rebel group, state news agency LANA said on Thursday.

Libya's oil output was around 230,000 barrels per day (bpd) on Wednesday, but the production level was unclear on Friday.

Investors also kept an eye on the ongoing conflict in Ukraine - a main gas supply route to Europe from Russia - where presidential elections are scheduled for Sunday.

Ukraine said more than a dozen servicemen were killed on Thursday in an early morning clash with pro-Russian separatists, fuelling security concerns ahead of Sunday's vote.

Little data was due ahead of the U.S. Memorial Day weekend. Floor trading will be closed on Monday and there will be no settlement on the New York Mercantile Exchange. (Reporting By Jacob Gronholt-Pedersen; Editing by Richard Pullin and Tom Hogue)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.