February 13, 2013 / 3:31 AM / 5 years ago

Brent steadies under $119 as higher demand outlook supports

* Higher EIA, OPEC demand forecasts support prices

* G20 meeting this week eyed for currency view

* Easing Iran tensions keep prices subdued

* North Korea tests, reactions closely watched

* Coming Up: U.S. retail sales; 1330 GMT

By Ramya Venugopal

SINGAPORE, Feb 13 (Reuters) - Brent crude steadied on Wednesday, holding just below a nine-month high near $119 per barrel on forecasts for a faster-than-expected growth in global oil demand this year, but easing tensions in Iran subdued prices.

The U.S. Energy Information Administration (EIA) and the 12-member Organization of the Petroleum Exporting Countries increased their outlook for world oil consumption growth, citing increasing signs of a recovery in the global economy.

Investors are also taking cues from the currency markets, which are awaiting a meeting of G20 finance ministers and central bankers this week amid increasing international tensions over the euro’s strength and the yen’s weakness.

“The faster demand forecasts are supporting oil prices, but the concerns of a currency war are weighing on the markets,” said Ker Chung Yang, senior commodity analyst at Philips Futures in Singapore.

Front month Brent futures shed 6 cents to trade at $118.60 per barrel by 0313 GMT. It touched a high of $118.75 earlier in the session, around 40 cents away from a nine-month high of $119.17 hit last week.

U.S. crude rose 6 cents to $97.57 per barrel.

Trading volumes were lower as China, Taiwan and Hong Kong remained closed for a third day this week for the Lunar New Year holiday.


Consumption of oil will expand by 840,000 barrels per day (bpd) this year, the OPEC said in its monthly report, 80,000 bpd more than previously expected.

Due to higher demand, and little change in supply expectations from producers outside the group, OPEC expects demand for its crude to average 29.78 million bpd in 2013, up 130,000 bpd from the previous estimate.

The EIA followed suit and increased its forecast for demand growth by 110,000 bpd to 1.05 million bpd in 2013, taking global demand to 90.2 million bpd this year, adding to evidence of global demand surpassing expectations in early 2013.

U.S. crude inventory may have risen last week as refineries head into maintenance in the world’s biggest oil consumer, but an expected cut in imports may negate the impact in coming weeks. Crude stocks may have risen 2.4 million barrels in the week to Feb 8, a Reuters poll showed.

Prices may get a fillip after euro zone industrial output data and U.S. retail sales data are released later in the day.

The oil markets also got some relief from easing tensions between Iran and the United States, which had been keeping prices elevated in recent months.

The Middle Eastern nation acknowledged that it was converting some of its higher-grade enriched uranium into reactor fuel, which is one way for Iran to slow the growth in its stockpile of material that could be used to make a bomb.

Iran’s production of that higher-grade uranium has been a worry for major powers because it is only a short technical step away from the 90-percent purity needed for a weapon.

Closer home for Asian investors was a nuclear test by North Korea, which may escalate tensions, especially after U.S. and China came down strongly on the Asian nation.

North Korea said the test had “greater explosive force” than those it conducted in 2006 and 2009.

Its KCNA news agency said it had used a “miniaturised” and lighter nuclear device, indicating it had again used plutonium, which is suitable for use as a missile warhead. (Editing by Himani Sarkar)

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