* Frigid winter boost heating oil demand in US, Europe
* Libya PM threatens force to re-open eastern oil ports
* U.S. economy loses steam as manufacturing slows in January
By Florence Tan
SINGAPORE, Feb 4 Brent hovered at around $106 a
barrel on Tuesday as a frigid winter boosted heating oil demand
in Europe and the United States, offsetting weak economic data
from the US and China.
Supply cuts in Libya and in the North Sea also limited
losses for Brent. Bad weather reduced output from Libya while
Prime Minister Ali Zeidan stepped up the pressure on protesters
blocking eastern ports on Monday, telling them he had weeks ago
ordered troops to prepare to move there to end their blockade.
March Brent crude edged down 6 cents to $105.98 a
barrel by 0322 GMT after two straight sessions of losses. U.S.
crude inched up 13 cents to $96.56 a barrel following its
largest daily percentage loss in nearly a month as it tumbled
with U.S. equities.
"Oil fundamentals seem supported in the short term because
OECD distillates inventories are low," Tony Nunan, a risk
manager at Mitsubishi Corp in Tokyo said.
U.S. distillate stocks, including heating oil and diesel
fuel, were forecast to have fallen 2.2 million barrels on
average last week, a preliminary Reuters poll of analysts
showed. U.S. commercial crude oil and gasoline stockpiles were
forecast to have risen last week.
The next support for West Texas Intermediate (WTI) crude is
at $96 a barrel, Nunan said.
"The support for WTI is more constructive as they really had
a cold winter," Nunan said, adding that two more snowstorms were
forecast to hit the United States, while the start-up of new
pipeline capacity is reducing a supply glut at the contract's
delivery point in Cushing, Oklahoma.
Oil is also gaining support from tighter supply in the North
Sea as the Buzzard oilfield, the largest field that contributes
to Forties, has had a new output glitch.
ECONOMIC WOES DRAG
Slowing economic growth in the U.S. and China raised
concerns about fuel demand at the world's largest oil consumers
while forecasts of excess supply this year weigh on oil prices.
The U.S. economy has lost steam as manufacturing activity
slowed sharply in January on the back of the biggest drop in new
orders in 33 years, while construction spending barely rose in
December, adding to concern about growth in China.
"The macroeconomic picture looks bad and that's why equities
are weak. The so called risk-off trade is in vogue now," Nunan
said, adding that the Federal Reserve's decision to further
reduce its bond purchases has compounded problems at emerging
(Reporting by Florence Tan; Editing by Michael Perry)