WTI futures hold ground as IMF raises US outlook, Africa supply disruptions

West Texas Intermediate remained near Fridays two-month high while Brent rose to the highest in two weeks as the IMF raised its outlook for the US economy, while escalating violence in South Sudan added to ongoing supply disruptions in Libya, holder of the continents biggest crude reserves.

On the New York Mercantile Exchange, WTI crude for delivery in February traded at $98.97 per barrel at 11:07 GMT, down 0.36% on the day. Prices shifted in a days range between $99.32, near Fridays two-month high of $99.40, and $98.87. The US benchmark advanced throughout last week to settle 2.8% higher, offsetting the previous five-day period’s 1.3% decline.

Meanwhile on the ICE, Brent futures for settlement in the same month stood at $111.50 per barrel at 11:07 GMT, down 0.25% on the day. Prices varied between session high of $111.92, the strongest level since December 6, and session low of $111.27 per barrel. The European benchmark added 1.5% on Friday and settled the week 2.7% higher, widening its premium to WTI to $12.58 based on closing prices.

Oil prices received support on Mondays pre-holiday trading after Christine Lagarde, the International Monetary Funds managing director, said the IMF is raising its outlook for the US economy as the reduction in Feds bond purchases and a budget deal in Washington eased concerns that economic growth in the US might not be sustainable.

Her statement comes after the Commerce Department’s final third quarter GDP growth reading defied analysts’ projections for a confirmation of the preliminary value’s 3.6% and posted at 4.1%, the largest quarterly expansion in nearly 2 years.

The Labor Departments latest jobs report showed that the unemployment rate fell to a five-year low of 7.0% in November, further brightening economic prospects.

Meanwhile, consumer spending, which accounts for 70% of the economy, outpaced expectations as well. The final Personal Consumption Expenditures reading jumped by 2.0% in the three months through September, exceeding projections to have gained 1.4%, the same as in the previous quarter.

Ric Spooner, a chief analyst at CMC Markets in Sydney, commented, cited by Bloomberg: “People are looking to a pretty solid year of moderate to improving economic growth around the world, led by the U.S. It’s looking as though the market has got the potential to move a bit higher from here.”

Meanwhile, the Organization of the Petroleum Exporting Countries, which accounts for 40% of global crude output, rejected a possibility of a supply glut next year amid prospects for stable global economic growth. The group agreed on December 4 to keep its production target at 30 million barrels per day for the next six months.

Libya, South Sudan

The oil market, and especially the Brent benchmark, continued to draw support as output in Libya, the holder of Africas biggest crude reserves, remained impaired by rebel groups demanding greater autonomy for the countrys eastern part.

Libyas oil minister said on Saturday that force should be used to reopen key eastern ports, which have remained closed since five months. Output has fallen to 250 000 barrels per day, down from 1.4 million bpd before the protests began.

Also adding to global supply fears, South Sudans main investor China National Petroleum Company evacuated its oil workers to the capital Juba amid escalating violence in the worlds youngest country.

South Sudans government reported on Sunday that rebels had captured the capital of a key producing region, adding to already arisen fears of an ethnic civil war that could cut the countrys 245 000 bpd production.

Jonathan Barratt, chief executive of commodity research firm Barratts Bulletin in Sydney, said, cited by CNBC: “Youve lost Libyan supply and youll lose Sudanese supply. Although they are not large amounts, they are significant enough to make people nervous. The escalation of violence in Sudan will probably start to push out the Brent-WTI spread again.”

Lifting some upward pressure on oil prices, workers voted to end a strike at Totals Donges refinery in western France on Sunday, but three remained shut. Four refineries were closed amid strikes over pay as of Thursday, which left a combined capacity of around 840 000 bpd offline and helped push gasoline prices up.