UPDATE 5-Brent slips to near $110/bbl after Ukraine election

Mon May 26, 2014 1:55pm EDT

Related Topics

* Ukraine tensions ease slightly after presidential election

* Resistance levels on charts cap gains in Brent, WTI (Adds byline, updates prices; changes dateline, previous LONDON)

By Julia Payne and Nia Williams

CALGARY, May 26 (Reuters) - Brent crude eased to near $110 a barrel on Monday, down from last week's two-and-a-half month high, as worries over Ukraine eased slightly following a presidential election.

Resistance levels for Brent and U.S. crude, or West Texas Intermediate (WTI), on technical charts were also keeping a lid on gains. Market activity was limited with the U.S. and UK markets were closed for holidays.

July Brent crude closed down 22 cents at $110.32 a barrel after hitting a two-and-a-half month high at $111.04 on May 22.

U.S. crude futures for July delivery were down 17 cents at $104.18 a barrel, after settling on Friday at their highest since April 21.

"You had the Ukraine elections, and Russia said it will respect it ... so there is no escalation," said Olivier Jakob at the Petromatrix consultancy in Zug, Switzerland.

Last week, fighting in Ukraine as well as production cuts in Libya and South Sudan had helped drive up Brent, but tensions eased after Russia said it would respect Ukraine's election results.

On Sunday, a decisive win for billionaire Petro Poroshenko in Ukraine's presidential election raised hopes of political stability in Ukraine - a main gas supply route to Europe from Russia.

Russia said on Monday it was ready for dialogue with Poroshenko, but warned authorities in Kiev not to step up armed operations against separatists in the east.

Also keeping pressure on oil prices, Statoil said on Friday it had resumed some production at the Snorre B platform in the North Sea.

Money managers raised their net long U.S. crude futures and options positions in the week to May 20, the U.S. Commodity Futures Trading Commission said, ahead of peak summer demand. The Memorial Day holiday usually marks the start of the U.S. driving season.

Speculators also raised net long positions in Brent by 25,661 contracts to 200,876 in the week, ICE data showed. They raised net long positions in gasoil by 7,386 contracts to 68,479 in the week.

Growth in oil supply is expected to exceed demand this year, spurring softer prices in the second quarter before rebounding in the second half of the year on seasonally stronger consumption, Morgan Stanley analysts said in a research note.

Barring new supply outages, global oil capacity will rise by 1.8 million barrels per day (bpd) this year, the fastest growth in a decade, the bank said, while product demand will grow by 1.1 million bpd.

LIBYA, IRAQ TENSIONS

Libya's El Sharara and El Feel oilfields remained shut, a spokesman for state-run National Oil Corp said on Sunday, almost two weeks after the government said protests at the western fields had ended.

OPEC production is likely to decline this year, despite an addition of 400,000 bpd of new capacity led by Iraq and Saudi Arabia, Morgan Stanley analysts said.

"Disruptions in Libya are likely to persist, and we see little hope for a material increase in Iranian oil exports during 2014," they said.

Sudan has offered to supply materials, engineers and electricity to South Sudan to speed up the repair of oilfields damaged during a five-month rebellion that has slashed output by a third, South Sudan's oil minister said on Saturday. (Additional reporting by Florence Tan in Singapore; editing by G Crosse and Jane Baird)

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