Brent crude oil fell on Monday, edging toward $110 a barrel as fears of supply disruptions out of Libya and Iraq abated. The North Sea oil benchmark reached a new three-week low, as Libya prepared to resume oil exports from two ports closed for nearly a year and violence in northern Iraq has spared the country's oil production. Brent had climbed to a nine-month high of $115.71 in June amid the Iraqi crisis, but has since dropped more than 4 percent, as supply exports have remained unaffected.
Brent fell 37 cents to $110.27 a barrel by 12:55 am EDT (1655 GMT). US oil fell 73 cents from Thursday to $103.33 a barrel. Friday, July 4, was a public holiday in the United States. "What we're seeing is a conclusion to the Iraq risk premium," said Richard Hastings, macro strategist at Global Hunter Securities in Charlotte, North Carolina. Brent and US crude futures are likely to head down to about $109 and $102 respectively by mid-week, Hastings said.
Libya's state-run National Oil Corp lifted force majeure from the major eastern Ras Lanuf and Es Sider oil ports after rebels agreed last week to end a blockade. The two ports had been exporting about 500,000 barrels per day (bpd) of crude, far below the 1.4 million bpd that the Opec producer pumped in the second quarter of last year, before protests started.
"If the agreement holds, it will take some time, probably a week or two, to inspect both the oilfields and the export facilities for damage and to complete any required maintenance or repairs," said Michael Wittner, oil analyst at Societe Generale. Oil shrugged off news of a heavier-than-expected maintenance programme for North Sea oilfields in August that is due to reduce loadings of crude from the four main export streams to just 695,000 bpd from over 900,000 bpd in July. This is the first time supplies of the four big North Sea oil streams have been below 700,000 bpd since 2010, according to Reuters data.
As oil supply to several major markets remains ample, oil prices have also been pressured by fairly sluggish demand for gasoline and diesel. German industrial output logged its biggest drop in more than two years in May, data showed on Monday, dampening fuel consumption in Europe's biggest economy. Oil prices remained largely unaffected by positive US employment trends data released on Monday. The Conference Board's Employment Trends Index, summarising eight employment-related indicators, rose 0.5 percent in June to 119.62, suggesting continued strong job growth throughout the summer.
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