Friday, September 05 09:33:46
Brent crude oil steadied near $102 a barrel on Friday, heading for a third weekly drop in four as a strong dollar depressed demand, though data showing lower crude stocks in the United States kept a floor under prices.
Oil prices on both sides of the Atlantic fell nearly $1 on Thursday as a surprise cut in interest rates by the European Central Bank led to a spike in the U.S. dollar, making it more expensive for holders of other currencies to buy the dollar-denominated commodity.
Brent was 15 cents higher at $101.98 a barrel by 0730 GMT, after settling down 94 cents. U.S. crude was up 28 cents at $94.73 a barrel after closing down $1.09.
Both benchmarks were on track to end the week with a loss of more than 1 percent.
"The main factor driving us down has been the strength of the dollar," said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt.
"Supply is plentiful, but it has been for some time. The change this week has been the rise of the U.S. currency. We would need to see a weaker dollar and signs of improving demand for oil prices to rise much on a sustainable basis."
Investors awaited U.S. jobs data later on Friday for clues on the outlook for demand in the world's biggest oil consumer and for pointers on the likely direction of the dollar.
U.S. crude oil stocks fell by 905,000 barrels last week, while gasoline stocks dropped by 2.3 million barrels, Energy Information Administration (EIA) data showed. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 385,000 barrels.
However, rising U.S. production, a glut of crude in the Atlantic basin and Asia, together with the potential for rising exports from OPEC-members Libya and Iran, continued to add downward pressure on oil prices.
Libya's oil production rose to 725,000 barrels per day (bpd) this week, more than six times the level two months ago, while successful talks between the West and Tehran over its nuclear programme could bring more Iranian barrels to global markets.
"We think any easing of sanctions (on Iran) will likely be negative for oil markets in the short term, but it is unlikely to be the significant sustained bear event for oil markets many may perceive," Morgan Stanley analysts said in a note.
Morgan Stanley says Iranian exports could recover to 1.5-2 million bpd over the next 12 to 18 months if sanctions are lifted. The country has been exporting slightly more than 1 million bpd in recent months. (Reuters)
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