(Updates prices to settlement, adds Brent-WTI spread)
By Lorenzo Ligato
NEW YORK Aug 4 Oil prices on both sides of the
Atlantic climbed on Monday, as investors shifted their attention
from worries about swelling supplies to concerns about ongoing
violence in Libya and other global hotspots.
Oil prices fell sharply last week, with the front-month of
Brent crude hitting its lowest level since April, and traded
lower early on Monday before bouncing back into positive
Brent crude gained 57 cents to settle at $105.41 a
barrel, off a session low of $104.52. U.S. crude gained
41 cents to settle at $98.29 a barrel, after touching a session
low of $97.43.
The spread CL-LCO1=R between the two benchmarks closed at
North Sea crude for immediate delivery has been at a
discount to futures for the longest period since 2011. This
contango market structure indicates a well-supplied market.
"The market is trying to stabilize after we reached a
four-month low last week," said Gene McGillian, an analyst at
Tradition Energy in Stamford, Connecticut. "We still have those
geopolitical hot spots and the market seems to be taking that
Buyers were lured back by fears of growing oil supply
disruptions due to escalating violence in Libya and Iraq, both
major producers, and the crisis in eastern Ukraine, where
Russian-backed separatists are fighting Ukrainian government
In Libya, oil output dropped to around 450,000 barrels per
day (bpd) from 500,000 bpd last week, but a spokesman for the
state-run National Oil Corp said oilfields were still secure
despite clashes between rival factions in the capital, Tripoli.
"Libya is really going down the wrong way. Production has
been slowly coming off," said Olivier Jakob of the Petromatrix
consultancy in Switzerland. "Libya could quickly return to a
much lower production level."
More than 20 people were killed in clashes around Tripoli on
Sunday as battles raged for control of the airport, and fighting
led to a huge fire at the city's fuel depot.
Commerzbank oil analyst Carsten Fritsch said oil prices
could rise significantly if the situation deteriorates further.
Meanwhile, the crisis between Russia and Ukraine
intensified, as reports emerged that the Ukrainian army is
deploying tactical missile launchers and multiple rocket-launch
systems near Donetsk in the east of the country.
"The market was trying to push the geopolitical fears aside
with all the supply and with demand not being all that robust,
but a headline like, 'Kiev deploying missile launchers,' brings
it back into the mix," said Phil Flynn, analyst at Price Futures
Group in Chicago.
In Iraq, July oil exports rose to an average of 2.44 million
barrels per day (bpd) from 2.42 million bpd in the previous
month, despite suspension of shipments from major oilfields
around Kirkuk due to fighting in the north.
Kurdish peshmerga forces said they planned a
counter-offensive against Islamic State fighters who seized the
Ain Zalah oilfield and the country's largest dam on Sunday.
(Additional reporting by Jack Stubbs in London and Keith Wallis
in Singapore; Editing by Jessica Resnick-Ault, David Gregorio,
Tom Brown and Paul Simao)