The International Energy Agency lowered its global demand forecast
for 2014 due to expectations that more Libyan crude will reach the
market next week, pushing Brent prices lower.
U.S. crude moved in tandem with U.S. gasoline prices, which surged
early in the session due to government data released mid-week that
showed a substantial draw on stockpiles, signaling robust demand
before the start of summer driving season.
Data showing U.S. consumer sentiment rose to a nine-month high in
April also provided support, and pushed the American benchmark's
price discount to Brent to its narrowest since mid-September.
Brent's price slipped after Russia backed off threats it made
Thursday to disrupt Ukraine's natural gas supply, and therefore
Europe's, unless Kiev paid its bill. Russian President Vladimir
Putin guaranteed Friday "fulfillment of all our obligations to our
"The reason we had a late day sell off is book squaring," said Phil
Thompson, director of Mobius Risk Group in Houston. "Once U.S. crude
got up to $104.50 there was profit taking, and RBOB had correlated
moves with (U.S. crude) all day" triggering a sell off in gasoline,
as well, Thompson said.
U.S. oil rose by as much as $1.04 to a session high of $104.44,
before giving back much of its gains to settle 34 cents higher at
$103.74 a barrel. The May contract rose nearly 2-1/2 percent on
average over last week.
U.S. gasoline RBOB rose by as much as 3.35 cents to a session high
of $3.0381 per gallon, but gave up most gains to settle 0.65 cents
higher at $3.0144 per gallon.
Brent crude settled 14 cents lower at $107.33 a barrel, but still
ended the week 0.5 percent higher on average.
The Brent-U.S. crude oil spread <CL-LCO1=R> contracted as tight as
$3.26, and settled at $3.59, its narrowest settlement since Sept.
Both contracts were pressured after the IEA said in a monthly market
report that global demand growth would average 1.29 million barrels
per day (bpd) in 2014, down 60,000 bpd from its previous forecast.
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This followed a similar trimming of the demand forecast by the
Organization of the Petroleum Exporting Countries in its monthly
report on Thursday to 29.65 million bpd in 2014, down 50,000 bpd
from the previous estimate.
Tensions between the West and Russia over Ukraine remained a
potential market mover after U.S. President Barack Obama and German
Chancellor Angela Merkel discussed further sanctions against Russia,
calling on Moscow to move its troops back from the border region.
The possibility that Libyan oil exports will pick up next week if
some of its oil ports reopen remains as a bearish factor in Brent
Libya's state National Oil Corp lifted a force majeure for the
eastern port of Hariga on Thursday, but the country's two biggest
ports, Es Sider and Ras Lanuf, remain blocked.
Late on Friday, the U.S. Commodity Futures Trading Commission
released data showing the speculator group increased their net long
U.S. crude futures and options positions in the week to Tuesday,
(Additional reporting by Claire Milhench in London and Manash
Goswami in Singapore; editing by Keiron Henderson, James Dalgleish
and Tom Brown)
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