* Deadly gun attack in eastern Ukraine shakes fragile Geneva
* Technical problems delay reopening of Libya's Zueitina oil
* Iran, world powers to start work on nuclear drafts next
* Brent neutral in $109.17-$110.40 range -technicals
By Manash Goswami
SINGAPORE, April 21 Brent futures dropped
towards $109 a barrel on Monday as investors took profits after
steep gains, but uncertainty surrounding the crisis in Ukraine
kept limited the decline.
Russia and world powers reached an agreement designed to
avert a wider conflict over Ukraine, but the viability of the
deal was bought into question with at least three people killed
in a gunfight.
Oil and broader financial markets are watching the unfolding
crisis that has already made ties between Russia, the world's
largest oil producer, and the West more fraught than at any time
since the Cold War, raising the risks from further economic
Brent crude futures lost 44 cents to $109.09 a
barrel by 0239 GMT, after rising to intraday highs of above $110
late last week, for the first time since early March. U.S. crude
oil futures declined 25 cents to $104.05 a barrel, after
ending 54 cents up.
"The market is being supported by Ukraine although we are
seeing some profit-taking coming in after the recent rise," said
Ken Hasegawa, a commodity sales manager at brokerage Newedge
Japan. "We may see Brent rise further by $1 to $2 a barrel if
the Ukraine crisis worsens, but it will retrace as the overall
market is well supplied."
Brent gained 2 percent last week, and has risen nearly 5
percent since the low of $104.79 a barrel for the year touched
earlier in the month with the unfolding of the in Ukraine.
Brent looks set to trade within a broad range of between
$103 and $113 a barrel, caught between geopolitical risks and an
improving supply outlook with expectations of higher shipments
from Libya, Iran and Iraq, Hasegawa said.
The U.S. benchmark will rise towards $105 a barrel, and if
it fails to break that key resistance level it will fall towards
$100 a barrel, he said. Even though the contract is drawing
support from an improving U.S. economy, rising U.S. production
will cap gains in prices.
Oil investors are keeping an eye on the resumption of
shipments from key north African exporter Libya.
Technical problems have delayed the reopening of Libya's
eastern Zueitina oil export terminal. Two weeks ago, the
government in Tripoli reached an agreement with rebels in the
restive east to end an eight-month occupation of four oil ports
which have halted vital exports.
Under the plan, the Hariga and Zueitina ports were due to
open immediately while the larger Ras Lanuf and Es Sider
terminals would resume oil exports within a month. But Hariga
port, located in Tobruk in the far east, would be the only one
to start operations due to technical problems at Zueitina.
Iran and world powers will begin work drafting a long-term
settlement of Iran's disputed nuclear programme at expert-level
talks in New York next month, the official state news agency
IRNA reported on Sunday.
Brent looks neutral in a range of $109.17-$110.40 per
barrel, and any break out of that range will provide direction,
while U.S. oil is tending towards a fall to test support at at
$103.19, according to Reuters technical analyst Wang Tao.
(Reporting by Manash Goswami; Editing by Simon Cameron-Moore)