Worries Over Disruptions As Oil Stabilises

Oil steadied near three-month high on Thursday, supported by
worries over possible disruptions to supply from the Middle East and a steep
fall in U.S. oil inventories.

Global crude oil benchmark Brent has risen more than a third
in less than two months on escalating worries about a conflict over Iran’s
nuclear programme.

Meanwhile, investors hope for more stimulus measures from
Central Banks that would boost commodities.

A fall in production in the North Sea during September, due
to maintenance, has also tightened supply in Europe and helped push up the
price of light, sweet crude for immediate delivery.

Brent futures fell five cents to 116.20 dollars per barrel,
after ending 2.22 dollars up at the highest settlement since May 2.

U.S. crude lost 20 cents to 94.13 dollars, after rising 90
cents to its highest settlement since May 14.

“As long as it keeps focusing on the chances of war in the
Middle East and quantitative easing in the United States, this market will stay
strong,” said Carsten Fritsch, commodity analyst.

“But the market has been overbought for a while and these
levels are not justified by fundamentals, which show plenty of oil available
and demand growth slowing.”

Data on Wednesday showing a sharp fall in stocks of oil in
the world’s top consumer, the United States, has also exacerbated global supply
worries.

U.S. crude stockpiles fell more than expected last week,
slipping 3.7 million barrels to 366.16 million barrels, the Energy Information
Administration reported, despite a modest rise in crude imports as plant
utilisation remained high.

Analysts had forecast a drop of 1.7 million barrels.

Inventories of refined products were mixed, with gasoline
stocks down 2.37 million barrels against an expected 1.5 million barrels.

Distillates, which include diesel and heating oil, rose
677,000 barrels versus a forecast decline of 200,000 barrels, the EIA said.

Crude stocks may have also declined in part due to the fall
in output because of hurricanes in the United States.

“This could be due to plant utilization as they say, but it
is certainly affected by market disruptions from bad weather in the U.S.,” said
Natalie Robertson, an analyst at ANZ.

“This would be taken as positive for crude in the coming
weeks.”

Investors are looking out for further indications of
monetary stimulus measures in the United States.

Consumer prices there were flat in July for a second
straight month and the year-on-year increase was the smallest in more than
1-1/2 years, giving the Federal Reserve room to tackle high unemployment.