* Supply glut outweighs conflict in Libya, Iraq and Ukraine
* Brent in longest contango since 2011 -Morgan Stanley
By Keith Wallis
SINGAPORE Aug 4 Brent crude rose to $105 a
barrel on Monday to come off of a four-month low hit in the
previous session, with worries about global oversupply still
outweighing concerns about violence in the Middle East and North
Forecasts for a supply glut in West African and European
markets help to push the Brent benchmark down 3.3 percent last
week, despite geopolitical tension in Iraq, Libya and Ukraine.
Strong U.S. economic data that signalled a better demand
outlook for oil in the world's largest economy was also unable
to support crude markets against the surplus barrels.
Downward pressure on oil prices is likely to continue, said
Ric Spooner, chief market analyst at Sydney's CMC Markets,
forecasting that Brent could drop further towards $100 a barrel.
"The geopolitical risk is still there ... (but) the market
has counted the risk premium in prices," he said.
Brent crude rose 16 cents to $105 a barrel by 0402
GMT after falling $1.18 on Friday to $104.84 a barrel, its
lowest settlement since April 2.
U.S. crude for September delivery edged up 10 cents
to $97.98 after ending last week at its lowest settlement since
Feb. 6. U.S. crude fell more than 4 percent last week in its
biggest weekly decline since January.
"We expect Brent to trade in a slightly lower range for much
of the third quarter, barring any geopolitical escalation,"
Morgan Stanley said in a market note on Monday.
Brent is in its longest contango since early 2011,
reflecting weak physical demand, the bank noted. A contango
market is when the front-month of a futures contract is trading
at a discount to later months, signalling an expectation that
prices will fall in coming months.
In Iraq, OPEC's second largest producer, Islamic State
fighters seized control of the Ain Zalah oilfield in the north
from Kurdish troops on Sunday, although the insurgents are not
near major oil fields around Kirkuk.
Investors are also keeping an eye on Libya where fighting
between rival factions led to a huge fire at Tripoli's fuel
depot on Sunday as battles raged for control of the capital's
airport in the worst violence since the 2011-NATO-backed civil
Ukraine government forces seized two towns on the outskirts
of Donetsk from pro-Russia separatists on Saturday, bringing the
army to the edge of one of the two major cities still in rebel
"One can never rule out the immediate prospect of things
deteriorating very fast," Spooner said, warning that any sign
the conflicts are disrupting oil supply could quickly push up
(Editing by Tom Hogue)