Brent tops $61 as Iraq, Libya offset U.S. stockpile jump

[March 05, 2015]  By Himanshu Ojha

LONDON (Reuters) - Brent crude future prices rose above $61 a barrel on Thursday, as investors brushed aside bearish U.S. inventories data to focus on tensions in Iraq and Libya.

A deteriorating security situation led Libya's state oil company to declare force majeure on 11 of its oilfields on Wednesday.

In Iraq, Islamic State militants have set fire to oil wells in the Ajil field east of the city of Tikrit to try to hinder aerial attacks aimed at driving them from the oilfield, a witness and military source said.

"I think this was one of the key triggers for the move higher (in prices). It seems to be that the market does seem to be paying a little bit of attention to geopolitical factors, namely Iraq and Libya," said Virendra Chauhan, oil analyst at Energy Aspects.

Output from Libya was at more than 400,000 barrels per day on March 1, higher than in January but well below the 1.6 million bpd levels seen before the country's 2011 civil war.

Brent has traded around $60 since mid-February, rebounding from a six-year low of about $45 hit in January.
 

Brent crude front-month futures rose 63 cents to $61.18 a barrel by 1133 GMT while West Texas Intermediate (WTI) crude rose 50 cents to $52.03.

A two percent gain in the previous session narrowed WTI's spread with global benchmark Brent to just above $9 a barrel.

"We're trading in a new range. At the moment that range for Brent is $56-$62 for WTI its $47-$54, and I think we're looking to stabilize," said Michael Hewson, chief markets analyst at CMC Markets.

"We'll continue to do so until such time as we get some indication that demand is starting to outstrip supply and I don't think we're there yet."

Tehran's ambassador to the International Atomic Energy Agency (IAEA) said on Wednesday no deal had been reached on the duration of any possible final agreement with world powers on Iran's program. That allayed investors' fears of an imminent rise in Iranian oil supply.

Government data showed commercial crude stockpiles in the United States hit a record high, rising twice as much as expected to 10.3 million barrels last week, but that failed to keep prices down.

"The rate of stock build has accelerated week by week throughout February and with upcoming refinery maintenance likely to weaken demand for crude, it is possible that this will continue in March," BNP Paribas analysts said in a note.

Saudi Arabia's oil minister voiced cautious optimism about the market outlook on Wednesday, saying he expected oil prices to stabilize.

(Additional reporting by Florence Tan in Singapore; editing by David Clarke)

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