* West, Iran activate landmark nuclear deal, lower chance of
* U.S. follows through on promise, begins Iran sanctions
* South Sudan says retakes oil state capital Malakal; rebels
* Brent oil neutral in $105.81-$106.80 range -technicals
By Manash Goswami
SINGAPORE, Jan 21 Brent futures eased towards
$106 a barrel on Tuesday as world powers and Iran took a step
forward in ending a decade-long dispute over Tehran's nuclear
programme, but worries of prolonged outages at other exporters
While chances of a potential conflict diminished after Iran
halted its most sensitive nuclear operations under a preliminary
deal, prospects of the OPEC member pumping more supplies still
remain far away. That kept investors focused on immediate supply
worries stemming from unrest in Iraq and Africa.
Brent crude fell 4 cents to $106.31 a barrel by 0340
GMT, after dropping to a low of $105.81 in the previous session.
U.S. oil futures slipped 48 cents to $93.89. Floor
trading was shut, and there will be no settlement on the New
York Mercantile Exchange due to the Martin Luther King Jr. Day
"Short-term supply related issues will continue to prop up
oil prices," said Victor Shum, vice-president of energy
consultancy IHS Energy Insight. "The Iran situation appears to
be making progress and that is some of the geopolitical tension
off, but lifting oil sanctions will be the last to happen."
The United States followed through on promised sanctions
relief as part of a nuclear agreement that began taking effect
on Monday, in exchange for steps that Tehran had taken.
Since Iran had fulfilled its initial nuclear commitments
under the deal, the United States will allow the six current
customers of Iranian oil to maintain their purchases at current
reduced levels for the six-month duration of an interim nuclear
deal between Iran and world powers.
A U.S. official said Iran was currently exporting about 60
percent less oil than it was two years ago and would be held to
those reduced levels.
Yet further declines in oil were capped by worries of
prolonged disruptions from South Sudan and OPEC member Libya.
South Sudan's president said his soldiers had seized the
regional capital Malakal back from rebels, a report dismissed by
insurgents battling the government.
Libya plans to remove protesters who have seized eastern
ports vital for lucrative oil exports within the next few days,
Prime Minister Ali Zeidan said on Sunday.
Since the summer, a group of heavily-armed demonstrators has
occupied three eastern oil ports which together accounted for
600,000 barrels per day of exports, to force the Tripoli
government to give it political autonomy.
"While Libya seems to be making progress in raising exports,
there are concerns out there of protests returning and hurting
oil output," said Shum. "You have South Sudan in conflict and
growing unrest in Iraq.
The March Brent contract looks neutral, as it is
moving sideways in a rising wedge, while U.S. oil is expected to
test a support of $93.48 per barrel, with a good chance of
breaking below it and falling further to $92.65, according to
Reuters technical analyst Wang Tao.
(Editing by Muralikumar Anantharaman)