Oil Slips Below $107 As Supply Outlook Improves

Brent crude oil price was
below 107 dollars a barrel last Thursday, as expectations of more supply outweighed news of a large drop in U.S. crude stockpiles.
Huge volumes of crude from Iran and Libya have been blocked by political and civil disputes.
Worries that the extra supply will tip the oil market into surplus are outweighing signs of accelerating global economic growth and increasing fuel demand, analysts say.
“In the short term, Brent crude oil appears to be reducing,” said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt.
“Oil prices have resisted a strong upward move in stock markets over the last month. That is a bearish sign.”
Brent crude for February delivery was down 48 cents at 106.65 dollars a barrel, after settling 74 cents higher on Wednesday. The contract was due to expire later on Thursday.
U.S. crude fell 20 cents to 93.97 dollars, after ending up 1.58 dollars in a third straight day of gains on Wednesday.
The February contract expires next Tuesday following a long U.S. holiday weekend.
Iran and world powers are due to begin talks in February on a deal to end a dispute over its nuclear programme.
The talks could include the easing of sanctions that are blocking up to 1.2 million barrels per day (bpd) of its oil exports.
Under a preliminary accord that goes into effect on January  20, Iran’s oil exports are to hold at current levels of about one million bpd.
Libyan oil supply could also rise sharply this year.
Libya’s southern El Sharara oilfield resumed production last week, increasing supply from the North African producer by more than 300,000 bpd.
On Wednesday, Libyan authorities were in negotiations with protesters threatening to restart a blockade of El Sharara, where protests cut output for two months last year.
U.S. crude oil found some support from data showing U.S. crude oil inventories fell 7.7 million barrels last week, compared with estimates of just 600,000 barrels.
It was the largest seven-week fall since records began.
The drop helped extend gains in U.S. oil.
Brent’s premium to U.S. crude continued to narrow, due to the expected start next week of the southern leg of the Keystone pipeline in the U.S.
The pipeline should help ease a supply glut at Cushing, Oklahoma, where the West Texas Intermediate crude contract is priced.
The spread reached a low of 12.42 dollars on Wednesday, the smallest gap in nearly two weeks.