LONDON: Oil rose towards $110 a barrel to its highest in almost seven weeks yesterday, supported by a weaker dollar, cold weather in the United States and renewed concern about threats to supply in the Middle East and Africa.
Stirring supply worries, Libya’s output fell, South Sudanese rebels said they seized control of an oil-producing state capital and expectations of a breakthrough in Iran’s nuclear talks with
world powers were dampened by both sides.
“Brent is getting a bit of help from the weak dollar and cold weather in the US,” said Christopher Bellew, a senior broker at Jefferies Bache in London.
“There was a moment towards the end of last year when there was a bit of improvement in the geopolitical situation on a number of fronts. That seems to have gone into reverse now.”
Brent crude was up 39 cents at $109.57 by 1513 GMT and traded up to $109.89, its highest since January 2, US crude was up 94 cents to $101.24 from Friday and reached its highest point since October 18. There was no settlement on Monday as US markets were shut for the President’s Day holiday.
Compounding supply concerns from Libya, South Sudanese rebels said they had seized control of the capital of oil-producing Upper Nile state, Malakal, yesterday.
South Sudan says it has already been forced to cut oil output by a fifth to 200,000 bpd, all of which is pumped from Upper Nile. Rebel control of Malakal could raise doubts about its ability to maintain the rate of output.
The dollar was trading near a six-week low against a basket of currencies, supporting commodities such as oil that are priced in dollars. Oil also drew support last week from an International Energy Agency report showing that inventories in the developed world had posted their steepest quarterly decline since 1999 in the last three months of 2013. Reports on US oil inventories will be released later this week.
Iran and six world powers began talks on a long-term deal for Tehran to limit its nuclear programme and the West to ease international sanctions. Progress in resolving the decade-long dispute would weigh on oil prices as the lifting of sanctions would allow the Opec producer to export more crude. Reuters
