Monday, October 22 10:02:04
Brent crude oil steadied above $110 per barrel today as fighting in Beirut and Gaza raised fears for the security of fuel supplies from the Middle East, helping stem a four-day decline in prices. Brent lost 4 percent last week on global economic uncertainty. But growing violence in parts of the Middle East, which supplies a third of the world's oil, has helped counter concerns over weaker fuel demand. Brent crude for December delivery rose 30 cents to $110.44 per barrel by 0855 GMT, recovering from a session low of $109.47, its weakest since Oct. 4. U.S. oil was up 50 cents at $90.55, also bouncing back from an intraday trough of $89.49.
Tensions surrounding Syria continued to put oil investors on edge and support prices, with fears that the violence could spread to other parts of the Middle East. Gunmen exchanged fire in southern districts of Beirut after the state funeral of an assassinated Lebanese intelligence chief ended in violence when angry mourners broke away and tried to storm the offices of Prime Minister Najib Mikati. The clashes fed into a growing political crisis in Lebanon linked to the civil war in neighbouring Syria. "(The tensions) destabilise the whole region and therefore have an impact on oil transportation, especially the oil from northern Iraq, which is transported through pipelines over the crisis region," said Carsten Fritsch, an analyst at Commerzbank.
Israeli forces killed two Palestinian militants during an incursion in the northern Gaza Strip on Monday that touched off clashes with gunmen from the governing Hamas movement, local officials said. Brent crude's premium to West Texas Intermediate futures, measured between December contracts, narrowed to around $20 from more than $24 last week, the widest in a year. Fritsch said investors were also buying back oil after prices had fallen four consecutive sessions, supporting prices. Other commodities were weak today.
London copper touched a one-month low today after disappointing earnings from leading U.S. companies and a bigger-than-expected fall in Japan's exports dented appetite for riskier assets. Weaker demand prospects coupled with ample supply are weighing on oil prices. "There's no shortage at the moment. From a fundamental point of view, Brent should soften to around $100," said Ken Hasegawa, commodity sales manager with Newedge in Tokyo. While recent employment and housing data from top oil user the United States have been relatively upbeat, the economy of No. 2 oil consumer China is, at best, on a tepid road to recovery, while Europe remains mired in a debt crisis. The Chinese economy could stage a feeble rebound in the fourth quarter on higher public infrastructure spending, although growth will remain lethargic through 2013, a Reuters poll of economists showed. ( C ) Reuters