Brent hovers below $103 as ample supply weighs

Wed Aug 27, 2014 10:49pm EDT

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* U.S. crude inventories fall 2.1 mln bbls last wk -EIA

* Cushing stocks rise 508,000 barrels -EIA

* Hopes of Ukraine-Russia ceasefire deal dim

* Iraq Basra crude exports fall in Aug on bad weather -sources

By Florence Tan

SINGAPORE, Aug 28 (Reuters) - Brent crude dipped on Thursday, but still held between $102 and $103 a barrel, as expectations of ample supply weighed on prices.

Global oil supply is expected to exceed demand this year, cooling prices. Oil futures on both sides of the Atlantic Basin are on track to post a second monthly decline.

October Brent crude has been unable to break through the $102-$103 range this week, just off a 14-month low hit last week. It was down 6 cents at $102.66 a barrel by 0221 GMT on Thursday.

U.S. crude was unchanged at $93.88 a barrel. The October contract stayed between $93 and $94 this week, hovering just above the year's low reached in January.

"It's just dropped so much from its peak and rightly so as it looks like there is crude everywhere," said Tony Nunan, a risk manager at Mitsubishi Corp.

"There's just too much supply and we've had terrible demand."

OECD oil inventories rose sharply in the second quarter, while tit-for-tat sanctions between the European Union and Russia have curbed growth in Europe, Nunan said.

Hopes that the presidents of Russia and Ukraine could reach a ceasefire deal dimmed after Ukraine accused Russia of launching a new military incursion across its eastern border on Wednesday.

Oil futures were little changed in the previous session following a neutral inventories report from the United States, while investors looked ahead to economic data to gauge the outlook for demand in the world's largest oil consumer.

U.S. crude stocks fell 2.1 million barrels last week, more than expected, but Cushing inventories rose 508,000 barrels, data from the Energy Information Administration showed on Wednesday.

Political instability in Iraq and Libya continued to weigh on investors' minds even though exports managed to rise instead of fall in recent months.

Analysts have warned that a comeback by Libya's oil industry may be short-lived as armed groups and two parliaments fight for control of the North African country.

Similarly, an Islamist insurgency in Iraq has threatened to derail long term output plans set by OPEC's second largest oil producer.

Exports from Iraq's southern terminals so far in August have fallen by about 140,000 barrels per day, according to loading data and industry sources who attributed the decline to bad weather.

"That's why I think Brent has stabilised around here because there's so much uncertainty in the Middle East," Nunan said. (Reporting by Florence Tan; Editing by Joseph Radford)

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