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UPDATE 2-Brent slips toward $106.50 on soft US, China manufacturing
March 25, 2014 / 7:46 AM / 4 years ago

UPDATE 2-Brent slips toward $106.50 on soft US, China manufacturing

* Supply concerns stemming from Ukraine crisis check losses

* Libya shuts El Feel oilfield, output drops (Updates prices)

By Keith Wallis

SINGAPORE March 25 (Reuters) - Brent crude fell towards $106.50 per barrel on Tuesday, dropping for a second straight session on disappointing manufacturing numbers from the world’s biggest oil consuming nations, although supply concerns stemming from the Ukraine crisis checked losses.

Surveys showed manufacturing activity in the United States slowed in March after nearing a four-year high in February, while shrinking in China for a fifth month in a row.

The weaker-than-expected numbers from the top two economies muddied the outlook for crude demand, while worries of a build up in U.S. oil stocks also weighed on prices.

Brent crude eased 16 cents to $106.65 by 0803 GMT, from Monday’s close of $106.81. U.S. crude, or West Texas Intermediate, slipped 17 cents to $99.43 a barrel, after ending slightly up at $99.60.

“The PMI flash figure is more significant,” said Tan Chee Tat, investment analyst at Singapore’s Phillip Futures.

The lower-than-forecast PMI figure “resulted in a swing in market sentiment to bearishness which weighed on oil prices”, the analyst told Reuters on Tuesday.

Oil prices could come under further pressure if data shows a continued rise in U.S. stockpiles last week, which would be a tenth straight weekly gain. The U.S. Energy Information Administration (EIA) is scheduled to release its U.S. oil stocks inventory data on Wednesday.

In the week to March 14, U.S. crude stockpiles soared nearly 6 million barrels, more than double forecasts, as refinery utilization rates fell to the lowest levels in nearly a year, EIA data showed.

“West Texas Intermediate is lower because of seasonal maintenance. There are less crude refinery runs,” said Yusuke Seta, commodity sales manager at Newedge Japan in Tokyo.

But the closure for a possible fourth day of the Houston Ship Channel following an oil barge spill on Saturday is keeping a floor under prices, Tan said.

Around 90 ships are waiting to move into or out of the Gulf of Mexico causing shipping delays that led Exxon Mobil Corp to cut production at the nation’s second-largest refinery and threaten output cuts at other refineries.


Investors are also keeping an eye on tensions in Ukraine and Russia, the world’s biggest oil producer, for trading cues.

U.S. President Barack Obama and major industrialised allies warned Russia that it faced damaging economic sanctions if President Vladimir Putin takes further action to destabilise Ukraine following the seizure of Crimea.

In Libya, oil production will be cut by about 80,000 barrels per day to about 150,000 bpd on Tuesday after the El Feel oilfield was shut because the pipeline to Mellitah port was closed, state-run National Oil Corp said.

But a surge in supply from Iraq and other oil producers should be more than sufficient to meet growing demand this year, the International Energy Agency (IEA) said earlier this month.

Iraq boosted output by 530,000 bpd in February to 3.62 million bpd, the highest since 1979, the IEA had said. (Editing by Himani Sarkar)

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