SINGAPORE: Brent reversed sharp overnight gains and fell towards $86 a barrel on Friday as investors' risk appetite took a hit from news that a doctor in New York City tested positive for Ebola.
The first confirmed case in America's largest city has renewed fears about the spread of the virus, prompting a tumble in US stock futures, while Asian shares also lost ground.
"Such news is not good for risk assets, with investors looking for a flight to safety. This could curb travel and that's how it could feed through to the oil markets," said Ben Le Brun, market analyst at OptionsXpress in Sydney.
"We could also be seeing some profit-taking after very strong overnight gains.
" The front-month contract of international oil benchmark Brent was down 37 cents at $86.46 a barrel by 0659 GMT. After settling $2.12, or 2.5 percent, higher on Thursday, its largest percentage gain in a day since June 12, Brent is poised to close the week higher, for the first time in five weeks.
US crude for December delivery fell 41 cents to $81.68 a barrel, after closing $1.57 higher, its largest daily gain since Sept. 16. The West Texas Intermediate crude is headed towards its fourth consecutive weekly loss.
SAUDI SUPPLIES LOWER Oil markets had risen sharply on news that crude supplies to the market from Saudi Arabia, the world's top oil exporter, fell to 9.36 million barrels per day (bpd) in September, down 328,000 bpd from August, according to an industry source.
This comes after OPEC's (Organization of Petroleum Exporting Countries) September world oil report that Saudi pumped 9.7 million bpd, up from 9.6 million bpd in August. The difference could be due to how much oil was put into storage.
"Certainly this was the good news that the market was looking for after news on weakening demand. And I think with the majority of the market in a short position, any positive news will give a major reaction to the upside. It's all over to the OPEC meeting now," Le Brun of OptionsXpress said.
Some analysts expect the subdued trend to continue until OPEC sends a clearer, official signal on its output target.
"It is still a bearish outlook and there seems to be no upside factor until clear signals emerge from OPEC on whether there will be a supply cut," said Ken Hasegawa, commodity sales manager at Newedge Japan.
The 12-member OPEC will meet on Nov. 27 to review its output target of 30 million bpd for the first half of 2015. So far, only a minority of members have called for an output cut, including Libya.
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