Published — Wednesday 7 August 2013
Last update 12 August 2013 10:35 am
LONDON: Oil fell below $108 per barrel, dropping for a fourth session, as concern eased about supply disruptions and as a report showed US crude inventories declined largely as forecast while products supplies unexpectedly rose.
Crude has dropped this week on progress in resolving supply disruptions in Libya, signs of higher North Sea output and as Iran’s new president signaled a willingness to negotiate with the West over its nuclear work.
Brent crude fell 66 cents to $107.52 a barrel by 1449 GMT.
US oil slipped 36 cents to $104.94, also falling for a fourth consecutive session.
“Supply risks have clearly shifted to the background at the moment,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
“This points to a shift in sentiment on the oil market.”
The weekly US Energy Information Administration report released at 1430 GMT said crude inventories declined by 1.32 million barrels — largely in line with the 1.2 million-barrel reduction analysts forecast.
The decline was smaller than the 3.66 million-barrel drop reported on Tuesday by industry group the American Petroleum Institute.
The EIA also reported small rises in gasoline and distillates stocks, in contrast to expected declines.
Oil slipped alongside falling equities on signs the US Federal Reserve might trim its stimulus program as soon as next month.
That stimulus has broadly underpinned oil and other commodities.
Crude also came under pressure on Tuesday from an easing of the Middle East supply risk premium. New Iranian President Hassan Rouhani said he was ready to enter “serious and substantive” negotiations over Tehran’s nuclear program.
Western sanctions over the nuclear work have cut Iranian crude exports by about 1 million barrels per day since early 2012, according to industry estimates.
The loss, and concern of a larger disruption to Middle East supply, have helped keep Brent above $100 for most of 2012 and this year.
“It is a fair bet that progress on the nuclear issue will be made with gestures on sanctions, small at first but probably growing larger,” said David Hufton of oil brokers PVM in London. “It is the oil industry’s version of tapering.”
In the North Sea, supply of the four crudes underpinning Brent futures will rise in September, loading programs showed on Wednesday.
Planned maintenance finished on schedule on the Forties pipeline this week.