Reuters logo
UPDATE 6-Oil drops below $111 on high U.S. output, inventories
November 28, 2013 / 5:31 AM / 4 years ago

UPDATE 6-Oil drops below $111 on high U.S. output, inventories

* Libya struggles to pay salaries, more clashes erupt

* U.S. crude stocks up, highest for Nov since records began

* Brent-WTI spread near highest since March (Updates prices, adds quote, changes dateline)

By Nia Williams

CALGARY, Nov 28 (Reuters) - Brent oil fell below $111 per barrel on Thursday, weighed down by a bigger-than-expected rise in U.S. crude stockpiles, although Libyan supply disruption kept prices supported.

Brent crude fell 46 cents to $110.85 a barrel by 1810 GMT. It is still up nearly 2 percent in November, and around $8 above its low for the month.

U.S. oil fell 8 cents to $92.22, hovering near the lowest in almost six months. It touched a low of $91.77 on Wednesday, its weakest since June 3.

U.S. crude oil stocks rose by almost 3 million barrels to 391 million barrels, their highest level for November since records began in 1982, the Energy Information Administration said in weekly data on Wednesday.

“In the absence of strongly positive factors, you’re going to get a bit of a drag-down effect (on Brent oil), simply because U.S. prices are falling and you would expect Brent prices would lag them,” said Michael Hewson, analyst at CMC Markets.

The EIA also said U.S. crude oil output last week exceeded 8 million bpd for the first time since January 1989. Earlier this month, its data showed that crude production exceeded imports for the first time in nearly two decades.

Libyan Prime Minister Ali Zeidan said on Wednesday his government would be unable to pay public salaries and may have to seek loans if armed militias blockading oilfields and ports continued to choke off crude shipments.

Brent oil’s premium to U.S. crude CL-LCO1=R reached $19.32 per barrel, just off its highest level since March.

“High inventories and rising supply in the U.S. are weighing on WTI (West Texas Intermediate), and once you step outside the bounds of North America you have a little bit more of an uncertain market because of Libyan factors,” said Martin King, analyst at FirstEnergy Capital in Calgary.

Trade is light due to the Thanksgiving holiday in the United States.

Refiners in Europe and the United States are coming back from maintenance and increasing output which has seen demand for crude recovering.

International Energy Agency (IEA) head Maria van der Hoeven said oil markets were adequately supplied even with the prospect of dwindling crude output from Libya.

In addition, Iranian supplies may increase if Tehran follows through on its commitments reached in a breakthrough deal with world powers over its nuclear programme at the weekend.

In the first concrete step under the cooperation agreement to clarify concerns about its disputed nuclear programme, Iran invited U.N. inspectors to visit its Arak heavy-water production plant on Dec. 8. {ID:nL5N0JD1WR] (Additional reporting by Manash Goswami; in Singapore and Simon Falush and Joshua Franklin in London; Editing by James Jukwey, Keiron Henderson and Leslie Gevirtz)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below