Crude supply from Libya is set to more than double from current
levels after production at the El Sharara field resumed over the
weekend as protesters ended a two-month blockade.
Brent crude for February delivery rose 13 cents to $107.02 at 0423
GMT, after having settled lower in the previous four sessions,
partly on expectations of rising Libyan exports.
U.S. crude fell a cent to $93.95 a barrel. The contract fell $1.48 a
barrel on Friday and posted its biggest weekly drop since June 2012.
"The situation in Libya will continue to be the main topic this
week," said Chee Tat Tan, an investment analyst at Phillip Futures
The resumption of Libya's El Sharara field could lift the country's
production to 600,000 barrels per day (bpd). Output from the
OPEC-member had fallen to 250,000 bpd from 1.4 million bpd in July,
boosting international oil prices.
The restart of the field was a rare success for Prime Minister Ali
Zeidan, who has been trying to end a wave of oilfield and port
blockages. But the situation remains volatile, with a different set
of protesters now blocking an oil pipeline in the west that runs to
the Mellitah export port.
"We have seen some new protests going on, so the actual return of
supply to world markets will depend on how well the government
controls the situation," said Tan.
Concerns over slowing growth in China and a strengthening dollar
also countered gains in oil and other commodities.
Growth in China's services sector fell to a four-month low in
December as business expectations dropped, a government survey
showed on Monday, adding to evidence that the second largest economy
lost steam at the close of 2013.
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The dollar hovered near a four-week high, supported by an upbeat
outlook on the U.S. economy by Federal Reserve Chairman Ben Bernanke
that fanned expectations of faster stimulus reduction by the central
A stronger greenback makes it more expensive for importers to
purchase dollar-denominated oil, weighing on demand.
South Sudan's oil production remained a concern even after the
government and rebels last week agreed to peace talks. Three weeks
of fighting have left more than a thousand people dead and disrupted
oil supply from the African country.
The talks could face delays, after gunfire erupted in the country's
capital, Juba, on Sunday.
An official in neighbouring Sudan, through which land-locked South
Sudan pumps its oil for export, said last week 239,000 barrels a day
of crude were being shipped though its pipeline.
(Reporting By Jacob Gronholt-Pedersen;
editing by Tom Hogue)
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