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UPDATE 8-Oil slips on profit taking but supported by Ukraine, Cushing
May 27, 2014 / 6:00 AM / 3 years ago

UPDATE 8-Oil slips on profit taking but supported by Ukraine, Cushing

* U.S. gasoline falls after Monday’s Memorial Day holiday

* New Ukraine leader says no talks with “terrorists”

* Libya oil output 160,000 bpd vs 1.4 million pre-uprising

* Cushing stocks seen falling -analysts

* Crude stocks seen rising 700,000 barrels -Reuters (Rewrites throughout, updates prices, adds analyst commentary)

By Elizabeth Dilts

NEW YORK, May 27 (Reuters) - Crude oil futures edged lower on Tuesday as traders took profit after a long holiday weekend, with prices supported by violence in Ukraine and expectations for a draw on U.S. crude stocks at the Cushing, Oklahoma hub.

Gasoline prices fell nearly 3 percent as traders dumped long positions taken before Monday’s Memorial Day holiday in the U.S., which marked the start of the summer driving season.

The tumble pulled Brent and U.S. crude lower, with Brent settling 30 cents down at $110.02 a barrel. U.S. light crude oil settled 24 cents lower at $104.11 a barrel. U.S. gasoline fell 2.8 cents to $2.9952 a gallon.

Still, heightened geopolitical risk in Libya and Ukraine has helped Brent gain more than 6 percent since early April. U.S. crude has gained nearly 6 percent in the month of May.

Libyan protesters blockading oil ports since last summer have caused exports to dwindle to about one-tenth of capacity. Conflict in eastern Ukraine, a main gas supply route to Europe from Russia, continued to worry investors that the violence could disrupt oil supplies as well.

Also supportive, U.S. commercial crude stocks were expected to have fallen further last week at the delivery point for U.S. crude futures at Cushing, analysts said, though a Reuters poll found overall crude stocks were seen as rising 700,000 barrels.

Weekly inventory will be released one day late due to the holiday on Monday. The American Petroleum Institute will release its report Wednesday at 4:30 p.m. EDT (2030 GMT), followed by the U.S. Energy Information Administration’s report on Thursday at 11:00 a.m. EDT (1500 GMT).

“We saw a bit of a drop off in the RBOB (U.S. gasoline) as we got past Memorial Day,” said Phil Flynn, analyst at Price Futures Group in Chicago. “U.S crude wants to start breaking down (in price) but it isn’t doing it yet.”

“There is probably $10-$12 of risk premium in the price because there is so much uncertainty across the world. We are staying elevated because Cushing inventories are so low.”

In Libya, new protests slowed work at Hariga port causing the OPEC producer’s output to fall to 160,000 barrels per day (bpd), versus the 1.4 million bpd produced before the 2011 uprising against Muammar Gaddafi.

The leader of rebel groups said he did not recognize the new Libyan prime minister’s government and indicated a deal reached previously to end his blockade could be in jeopardy.

Ukrainian aircraft and paratroopers killed more than 50 pro-Russian rebels in an assault on the eastern city of Donetsk that raged into a second day after a newly elected president vowed to crush the revolt in the east once and for all.

Additional reporting by Christopher Johnson in London and Manash Goswami in Singapore; Editing by David Evans, Bernadette Baum and Marguerita Choy

Our Standards:The Thomson Reuters Trust Principles.
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