Crude oil prices trended lower following gains on Friday after
weaker-than-forecast U.S. non farm payrolls suggested the Federal
Reserve may slow down tapering its bond-buying stimulus.
Brent crude for February delivery fell 15 cents to $107.10 per
barrel at 0358 GMT, after settling 86 cents higher on Friday. U.S.
crude also slipped, to $92.45 per barrel. The contract had settled
$1.06 higher on Friday.
"Obama's comments act in favour of Iran and contribute to more
downside in oil markets given the potential inflow of Iranian
barrels to oil markets," said Chee Tat Tan, investment analyst at
Phillip Futures in Singapore.
The highly anticipated U.S. jobs numbers on Friday showed a rise of
just 74,000 in December, the smallest increase since January 2011.
"While the numbers were relatively disappointing, this will help
alleviate expectations about Fed tapering," said Tan. Massive bond
purchases by the Federal Reserve have boosted liquidity and appetite
for risky assets such as oil.
"All in all, I think the jobs data is slightly supportive for oil
prices," said Tan.
A deal between Iran and six major powers intended to pave the way to
a solution to a long standoff over Tehran's nuclear ambitions will
come into force on Jan. 20, the Iranian Foreign Ministry and the
European Union said on Sunday.
Sanctions against Iran over its nuclear program have kept about 1
million barrels per day of oil off global markets, but an agreement
reached Nov. 24 last year raised hopes of a long-term deal that
could see Iran resuming full exports.
Obama urged the Congress not to impose additional sanctions on Iran,
saying that doing so risked undermining the Nov. 24 agreement, which
aims to give the two sides six months to reach a comprehensive deal.
However, Washington would be prepared to increase its sanctions if
Iran fails to abide by the agreement, Obama added.
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In a deal that seemed to undermine Western sanctions against the
country, sources said Iran and Russia are negotiating an
oil-for-goods swap worth $1.5 billion a month that would enable Iran
to lift oil exports substantially.
More South Sudanese supply could also find its way to global
markets, after the country's army said it had regained a rebel-held
northern town, giving the government control of a region where oil
production had been halted by fighting in recent weeks.
Brent prices were supported by reports of fresh production problems
at the North Sea's Buzzard oilfield. Buzzard is the largest of the
fields that contribute to the Forties crude blend, the most
important of the North Sea crudes underpinning the Brent crude
In Libya, the tension between government forces and rebels groups
worsened after gunmen killed the country's deputy industry minister,
Hassan al-Drowi, on Saturday.
Libya is still plagued by violence and assassinations more than two
years after civil war ousted Muammar Gaddafi, which has hurt oil
output from its peak of 1.6 million bpd.
Libya's El Sharara field is currently producing 300,000 barrels per
day (bpd) of oil compared to its peak output of 340,000 bpd, the
country's oil minister said Sunday.
(Editing by Muralikumar Anantharaman)
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