Oil fluctuates on easing supply concern, EIA report in focus

Oil prices fell on Tuesday with concern over supply disruptions easing as Libyan Oil Minister Abdelbari al-Arusi assured the government is working to end the protests, while newly elected Iranian President Hassan Rouhani sought to start a dialogue with the U.S., aiming at resolving the issues over Tehrans nuclear program. EIAs weekly crude oil inventories report came into focus.

On the New York Mercantile Exchange, WTI crude for September delivery traded at $106.08 per barrel at 7:29 GMT, down 0.46% on the day. Prices shifted between days high and low of $106.61 and $106.26 a barrel respectively. Futures slid 0.23% on Monday, extending current weeks decline to 0.5% so far after advancing 2.1% the previous 5-day period.

Meanwhile on the ICE, Brent for delivery in September tumbled for a third day to $108.33 a barrel by 7:30 GMT, down 0.34% on the day. Prices held in range between days high and low of $108.82 and $108.27 per barrel respectively. The European benchmark slipped 0.07% on Monday, extending its weekly decline to 0.5% after advancing 1.7% the previous week.

Oil prices eased this week as some of the supply concerns which built up a premium began to ease. Yesterday, Libyan Oil Minister Abdelbari al-Arusi said that the country’s output has risen to about 700 000 barrels per day and that the government was working to end the protests. The countrys output, which averaged 1.6 million barrels per day before the protests began, declined by more than a half as protesters closed all of Libyas ports except one.

Meanwhile, production in North Sea’s Buzzard oilfield, Britain’s largest, was expected to be restarted on Monday after being down for maintenance for five days.

ANZ analysts said in a report: “Prices were pressured early on after Libyas oil minister announced an improvement in oil output to around 700,000 barrels per day (bpd) from 300,000 bpd last week. Britains Buzzard oilfield is also expected to restart this week, after a five-day maintenance shutdown.”

Concern over global supply also eased as Irans newly elected President Hassan Rouhani called for a dialogue with the U.S. regarding the countrys disputed nuclear program, signalling willingness to resolve issues and improve relations. Irans oil exports fell by more than a half due to U.S. sanctions regarding the program.

EIA report in focus

Meanwhile, losses remained limited ahead of the Energy Information Administrations weekly crude oil inventories report, which should show a decline in oil reserves. According to a Bloomberg News survey, U.S. crude stockpiles should have fallen by 1.1 million barrels to 363.5 million in the week ending August 2, which if confirmed will be the lowest since January. Gasoline reserves probably surged by 500 000 barrels, while distillate fuel reserves are expected to have fallen by 400 000 barrels.

The industry-funded American Petroleum Institute will post its separate report later on Tuesday. However, APIs information is considered as less reliable than EIAs statistics because it is based on voluntary information from operators of refineries, bulk terminals and pipelines.

Ric Spooner, a chief market analyst at CMC Markets in Sydney, said for Bloomberg: “The markets are waiting for a bit of news for short-term direction. We have production and inventory statistics in the U.S. and China’s round of monthly statistics later in the week.” He predicts market players may buy WTI at about $102 per barrel.