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Brent stays above $109 on US winter demand, weak dollar
February 18, 2014 / 3:06 AM / 4 years ago

Brent stays above $109 on US winter demand, weak dollar

* Frigid winter in North America drains oil supply

* Dollar near 6-week lows, supports commodities

* World powers and Iran resume nuclear talks on Tuesday

By Florence Tan

SINGAPORE, Feb 18 (Reuters) - Brent crude was little changed on Tuesday, staying above $109 a barrel, as robust demand for heating purposes from North America and a weak dollar offset concerns over disappointing U.S. data.

Brent crude was trading at $109.08 a barrel by 0302 GMT, holding just below Monday’s close of $109.18 - the highest settlement since Feb. 7.

U.S. crude was up 42 cents at $100.72 a barrel. There was no settlement on Monday as U.S. markets were shut for Presidents’ Day holiday.

“There’s obviously general support from the cold weather and support is also coming from the U.S. dollar weakness,” said Ric Spooner, chief analyst at CMC Markets in Sydney.

”On the other hand, the general run of disappointing economic statistics from the U.S. including retail sales and non-farm payroll was probably a consequence of cold weather.

“Market will be more comfortable when we get through the cold weather and see those figures return to trend levels.”

A slew of disappointing U.S. data pinned the dollar near six-week lows against a basket of currencies on Tuesday, while investors will scour the minutes of Federal Reserve’s last policy meeting on Wednesday and China’s manufacturing data on Thursday for clues on the health of the global economy.

A weak dollar supports commodities priced in the greenback by making them cheaper for holders of other currencies.


Oil prices also drew support from a report that showed developed countries started the year with the lowest oil inventories since 2008.

Oil inventories in the developed world plummeted by 1.5 million barrels per day (bpd) in the last three months of 2013, the steepest quarterly decline since 1999, the International Energy Agency (IEA) said in its monthly report last week.

The oil demand outlook for 2014 has also improved as global agencies the IEA, OPEC and the U.S. Energy Information Administration have all raised their forecasts on stronger economic growth in Europe and the United States.

Political instability in Libya added to global supply concerns. Libya’s oil production has dropped to 390,000 bpd, some 70,000 bpd less than last week, as protests have partly blocked flows from the El Sharara oilfield, the state National Oil Corp said.

On Tuesday, Iran and the world powers will start negotiations to strike a long-term nuclear deal.

A positive outcome would be negative for oil as sanctions on Tehran would ease, allowing the OPEC producer to export more crude and add to global supply.

“The market’s attitude is to react to news as they unfold,” Spooner said. “If there is any advance or any progress on lifting sanctions, that would be a positive for supply.” (Editing by Himani Sarkar)

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