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UPDATE 9-Brent rises on supply risks, U.S. crude down as stockpiles build
August 13, 2014 / 8:36 AM / 3 years ago

UPDATE 9-Brent rises on supply risks, U.S. crude down as stockpiles build

* Brent prices up after falling to lowest since July 2013

* U.S. crude stocks rose 1.4 mln barrels last week - EIA

* Cushing stocks up 418,000 barrels - EIA

* Nigerian cargoes sold, lift Brent futures (Updates prices to settlement)

By Anna Louie Sussman and Robert Gibbons

NEW YORK, Aug 13 (Reuters) - Brent crude oil rose by nearly $1 per barrel in choppy trading on Wednesday, recovering from a 13-month low as turmoil in Iraq and Libya kept concerns about potential supply disruptions in focus.

The sale of several Nigerian cargoes in the West African cash crude market also gave Brent prices a lift.

U.S. crude prices edged higher, paring earlier modest losses after the U.S. Energy Information Administration (EIA) reported crude oil inventories rose 1.4 million barrels last week, against expectations stocks would be lower.

The U.S. crude oil stocks build included a 418,000-barrel increase at the Cushing, Oklahoma, delivery point for the U.S. crude contract traded on the New York Mercantile Exchange.

Ahead of the front-month September contract’s expiration on Thursday, Brent crude rose $1.26 to settle at $104.28 a barrel. The session low of $102.37 was the weakest price since July 2013.

The Brent contract for October delivery rose $1.17 to close at $105.06 per barrel.

“It sounds like the cash market for Brent is getting up a little bit; there are less unsold Nigerian cargoes, which of course had been weighing on the market,” said Andy Lebow, vice president at Jefferies Bache in New York.

U.S. crude, also known as West Texas Intermediate or WTI, rose 22 cents to settle at $97.59 a barrel. Its discount to Brent CL-LCO1=R narrowed to $5.21, the lowest in almost three weeks, earlier in the session, before widening to settle at $6.69.

Brent has fallen 9 percent since mid-June as Islamic State militants in northern Iraq have not yet created major supply outages, while global production has risen.

But traders said market participants remained cautious, with buying expected as Brent prices neared the $100 level.

“Brent was due for a correction,” said Carsten Fritsch, analyst at Commerzbank.

Even as traders and analysts continue to worry about the potential for turmoil in Libya and Iraq to disrupt supply, increasing production from the Organization of the Petroleum Exporting Countries (OPEC) and the United States has curbed some of the concerns.

“Brent prices have been in a steady decline and I think the background of that is that the market is forming the view that any supply disruptions are not on the immediate horizon,” said chief market analyst Ric Spooner of CMC Markets.

Exports from Libya are recovering despite the recent unrest, with the first leaving the port of Ras Lanuf on Tuesday after a year-long harbor blockade.

Unrest in Iraq has yet to disrupt significant amounts of oil, though some small fields have been shut in the autonomous Kurdish region.

The United States has sent around 130 additional military personnel to Iraq as Washington seeks to help Baghdad contain the threat posed by militants.

OPEC output rose to a five-month high above 30 million barrels per day (bpd) in July and U.S. crude production averaged an estimated 8.5 million bpd, according to reports on Tuesday from the International Energy Agency and the EIA.

Also curbing crude prices on Wednesday was news that demand in China, the world’s second-largest oil consumer, slipped last month, according to preliminary government data, with implied oil consumption down 2 percent from a year earlier. (Additional reporting by Robert Gibbons in New York, David Sheppard in London and Seng Li Peng in Singapore; Editing by Marguerita Choy and Chizu Nomiyama)

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