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 U.S. crude oil futures traded marginally lower over the day, and
settled down for the second time this week. However, losses were
capped by data showing a drop in jobless claims and a rise in
consumer prices to their highest in six months in the world's
largest oil consumer.
Brent largely held steady between an expected increase in supply
from Libya and Iran and OPEC cuts.
"The overall trading range in Brent has been a narrow range" due to
mitigating geopolitical factors, said Dominick Chirichella, a
partner at Energy Management Institute.
Brent crude for February delivery expired down 4 cents at $107.09 a
barrel, after settling 74 cents higher on Wednesday. Brent March
crude oil, which becomes the front month on Friday, settled down 52
cents at $105.75 a barrel.
Losses in Brent were capped by an analyst's report that seaborne oil
exports from the Organization of the Petroleum Exporting Countries,
excluding Angola and Ecuador, will fall by 660,000 barrels-per-day
(bpd) in the four weeks to Feb. 1.
U.S. crude settled down 21 cents at $93.96 a barrel, after ending
$1.58 higher on Wednesday. The February contract expires on Tuesday,
after the Martin Luther King, Jr. holiday on Monday. Floor trading
on the New York Mercantile Exchange is shut on Monday and settlement
prices will not be posted.
The spread between the two oil benchmarks <CL-LCO1=R> narrowed to
$12.35, the smallest gap in nearly two weeks, before widening at
settle at $13.13.
Analysts said West Texas Intermediate's (WTI) recent strength
against Brent is likely temporary.
"I'll trust that strength a lot more if I can see gasoline regain
losses," said Walter Zimmermann, chief technical analyst for United-ICAP.
TransCanada announced the southern leg of its 700,000 barrel per day
Keystone XL pipeline will only run at less than half capacity bpd
when it begins service, expected on Jan. 22.
Traders anticipate the pipeline would play a role in easing a supply
glut of WTI crude in Cushing, Oklahoma, where the contract is
priced, and narrow its discount to Brent.
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Heating oil futures pared gains to settle 0.2 percent higher at
$2.9845 per gallon from a midmorning high of close to $3. Gains were
capped as gas oil stocks at Europe's Amsterdam-Rotterdam-Antwerp hub
rose 5.8 percent this week, indicating less of a need for U.S. fuel
exports.
OPEC lowered its oil output further and is pumping less than this
year's global need for its crude. OPEC pumps a third of the world's
oil, but analysts said a drop in production is not enough to sway
U.S. domestic crude oil markets.
OPEC's forecast could get a boost if negotiations between Iran and
world powers, due to start in February, end a dispute over the
Islamic republic's nuclear program and result in easing sanctions
that are blocking up to 1.2 bpd of its oil exports.
A resolution could mean a glut of supply as Iranian oil comes
online, though Iran's foreign minister said he expected other OPEC
producers to reduce production to make room for rising Iranian oil
supplies.
Libya's southern El Sharara oilfield resumed production last week,
increasing supply from the North African producer by more than
300,000 bpd. Output would rise even further if a blockade of Libya's
eastern oil ports were to end.
(Additional reporting by Christopher
Johnson in London and Jacob Gronholt-Pedersen in Singapore; editing
by Anthony Barker, Jane Baird, Peter Galloway and David Gregorio)
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