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UPDATE 4-Oil holds around $110, supported by Libyan output drop
February 24, 2014 / 6:06 AM / in 4 years

UPDATE 4-Oil holds around $110, supported by Libyan output drop

* Libyan oil output falls to 230,000 bpd as El Sharara shuts

* G20 aspires to faster economic growth

* South Sudan’s oil production hit by fighting

* Coming Up: U.S. Services PMI at 1358 GMT (Updates detail, comment, prices; paragraphs 1,5, 10, 12-13)

By Shadi Bushra

LONDON, Feb 24 (Reuters) - Brent crude oil steadied around $110 a barrel on Monday, resisting sharp declines in some other risk assets on news of further supply losses in Africa and expectations of revived oil demand growth.

Libyan oil output plunged further over the weekend, falling to 230,000 barrels per day (bpd) on Sunday after a new protest shut the El Sharara field.

Before nationwide protests started in the middle of last year, Libyan oil production was closer to 1.4 million bpd.

“As long as the Libyan security situation is unstable, global oil prices will be buoyed,” said Michael Poulsen, analyst at Danish consultancy Global Risk Management.

Brent crude was down 30 cents to $109.55 a barrel by 1100 GMT, after settling higher for a second straight week. U.S. oil fell 20 cents to $102.00, after climbing for the sixth week in its longest winning streak in more than a year.

Oil markets also found support from a fairly upbeat meeting of the world’s top economies in Sydney, which announced a target of generating more than $2 trillion in additional output over five years while creating millions of new jobs.

Oil demand tracks global economic growth closely.

“The outlook is momentarily positive for energy prices,” said Michael McCarthy, chief strategist at CMC Markets. “It is more the demand side of the equation. Reasonable global growth in oil demand is expected.”

Investors also kept an eye on global political tensions and the potential for further disruption to oil exports.

“One of the reasons for the price staying up around $110 is the geopolitical risk, with reduced exports coming out of Libya, negotiations over lifting sanctions on Iran going very slowly, Syria remaining in the background and maybe Ukraine as well as South Sudan,” said Christopher Bellew, oil futures broker at Jefferies Bache.

In South Sudan, the capital of the main oil-producing Upper Nile region, Malakal, remains divided between the army and rebels, government officials say.

On Saturday, the national government over-ruled Upper Nile state’s plan to partially shut down oil production and evacuate foreign workers after the rebel offensive.

A petroleum ministry official said that South Sudan’s oil production had fallen to about 170,000 bpd even before the rebel strike on Malakal, a drop of around a third since the fighting erupted in December. (Additonal reporting by Manash Goswami in Singapore; editing by Christopher Johnson)

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