Sponsored by: Investment Center

Something new in your business?  Click here to submit your business press release

Chamber Corner | Main Street News | Job Hunt | Classifieds | Calendar | Illinois Lottery 

Brent edges down towards $109 on tapering concerns

Send a link to a friend 

[December 12, 2013]  By Jacob Gronholt-Pedersen

SINGAPORE, Dec 12 (Reuters)  Brent futures edged towards $109 a barrel on Thursday as a looming U.S. budget deal backed expectations the Federal Reserve may act soon to unwind a stimulus programme that has supported oil prices.

Oil fell along with most other commodities, while Asian shares fell to a four-week low, after Republicans in the U.S. House of Representatives were seen backing a two-year budget deal negotiated behind closed doors.

"Passing of the budget would give the Fed one last reason to exit the stimulus programme. Expectations are creating a weaker sentiment for oil and other commodities," said Chee Tat Tan, investment analyst at Phillip Futures in Singapore.

Brent crude oil fell as much as 21 cents to $109.49 a barrel and was down 3 cents at $109.67 by 0508 GMT, after settling 32 cents higher. U.S. crude futures for January delivery were 6 cents lower at $97.38.

A vote on a tentative budget agreement is likely to be held this week. A deal would remove fiscal uncertainty ahead of next week's much-anticipated Federal Reserve meeting.


U.S. crude inventories fell 10.6 million barrels last week to 375 million barrels, according to the Energy Information Administration, much more than the 3-million-barrel draw forecasted by analysts polled by Reuters.

But the U.S. benchmark oil contract closed $1.07 lower on Wednesday, as investors viewed the steep decline as a move by refiners to avoid taxes instead of a sign of strong demand.

Also weighing on prices was a sharp rise in U.S. gasoline inventories, signaling weak domestic demand ahead of the holiday season.

"This is a concern because crude production in the United States is rising. All put together we see a bearish picture," said Tan of Phillip Futures.

[to top of second column]

Nevertheless, the International Energy Agency (IEA), the West's energy watchdog, said surging oil demand, especially in the United States, and faltering supplies mean oil prices face upside risks over the next few months.

Last month, U.S. oil demand jumped above 20 million barrels per day (bpd) for the first time since the 2008 financial crisis, IEA data showed, although it was not clear whether part of this demand reflected higher exports from U.S. refiners.

Comments from Libyan officials that three oil ports that had previously shipped around 600,000 bpd of oil could reopen this weekend weighed on Brent prices.

Seizures of ports and oil fields by protesters demanding a bigger share of oil exports have slashed Libya's oil shipments to some 110,000 bpd, from more than 1 million bpd in July.

Investors will keep an eye for U.S. weekly jobless claims due at 1330 GMT for signs of continued recovery of the world's biggest economy.

(Editing by Muralikumar Anantharaman and Tom Hogue)

[ 2013 Thomson Reuters. All rights reserved.]

Copyright 2013 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

< Recent articles

Back to top