February 21, 2014 / 3:26 AM / in 4 years

Brent steadies above $110 on Africa supply cuts

* Cushing crude stockpiles fall 1.73 mln barrels -EIA

* South Sudan cuts oil production to 170,000 bpd -official

* Coming up: U.S. existing home sales at 1500 GMT

By Florence Tan

SINGAPORE, Feb 21 (Reuters) - Brent crude hovered above $110 a barrel on Friday, underpinned by supply disruptions in Africa, while U.S. oil is set for a sixth weekly rise buoyed by lower supplies at the contract’s delivery point and strong heating demand in North America.

Gains in West Texas Intermediate (WTI) crude shrank its gap with Brent to the narrowest in four months as supplies at WTI’s delivery point in Cushing, Oklahoma, fell after a new pipeline diverted crude to the Gulf Coast.

April Brent crude had inched up 1 cent to $110.31 a barrel by 0254 GMT, while U.S. crude futures for April delivery dropped 1 cent to $102.74.

Brent’s premium to U.S. crude CL-LCO1=R narrowed to as little as $7.09 in the previous session, its tightest since Oct. 9.

“There is more upside for WTI than Brent because of the ongoing bullish news,” said Tan Chee Tat, analyst at Phillips Futures in Singapore, pointing to extreme winter conditions in the United States that are boosting heating oil demand.

A weaker U.S. dollar, which fell to a seven-week low against the euro earlier this week, has also boosted demand for dollar-denominated commodities as they become more affordable to holders of other currencies.

Energy Information Administration (EIA) data released on Thursday was mixed for oil as Cushing crude stocks fell 1.73 million barrels in the week to Feb. 14, while the country’s overall crude inventories rose almost 1 million barrels.

Distillate stocks fell just 340,000 barrels, the data showed, far less than the 2 million barrel draw expected by analysts.

Domestic conflicts in Libya and South Sudan, and escalating protests in Venezuela are supporting Brent prices.

South Sudan has cut again its oil production to about 170,000 barrels per day even before the rebel strike on Malakal, which lies on the edge of Upper Nile state’s oil fields, a petroleum ministry official told Reuters. The government halted 45,000 bpd of output in neighbouring Unity earlier in the conflict.

Maintenance at Angola’s Plutonio oilfield in March will also cut supply by about 180,000 bpd.

“Renewed risks would definitely support Brent comfortably at $105-$110 a barrel, but it would not go beyond that,” said Tan.

Reporting by Florence Tan; Editing by Joseph Radford

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