Brent crude held steady above $110 a barrel on Monday, after posting its biggest weekly percentage gain last week since the first half of July, as unrest in Egypt stoked fears over oil supply security in the Middle East.
But investors remained cautious as they awaited more clues on when the United States, the world’s largest oil consumer, will begin trimming its monetary stimulus.
Brent crude oil futures for October delivery had slipped 14 cents to $110.26 a barrel by 0651 GMT. Brent hit a four-month high of $111.53 on Thursday on fears that violence in Cairo could affect the Suez Canal, a major oil conduit.
U.S. oil for September delivery fell 16 cents to $107.30.
“A lot of the focus is still on the rising tensions in Egypt and what that’s going to do to the supply of oil,” said Ben Le Brun, an analyst at OptionsXpress in Sydney.
“Playing second fiddle to that is some guess work surrounding the potential for tapering of the current quantitative easing programme in the U.S.,” he said.
Civil unrest in both Egypt and Libya supported prices. Egypt is not a major oil producer, but investors are wary that the unrest there could spread through the Middle East, which pumps more than a third of the world’s oil.
Egypt’s Muslim Brotherhood has accused security forces of killing dozens of detained Islamists, upping the pressure in a crisis that has rocked the Arab world’s most populous state.
At least 850 people have died since Wednesday in clashes pitting the followers of deposed Islamist President Mohamed Mursi against the army-backed government.
In addition, Libya’s oil production and exports have been crippled by violence and strikes, pushing exports to the lowest level since the 2011 civil war. The country’s largest refinery has reinstated some oil product exports.
Easing some supply fears, crude resumed flowing through a pipeline from Iraq’s Kirkuk oil fields to Turkey’s Mediterranean port of Ceyhan, Iraqi oil officials said on Sunday.
The flow was halted on Friday after a bomb attack near the northern city of Mosul, according to officials.
U.S. MONETARY STIMULUS
Investors are still waiting to see if minutes of the U.S. Federal Reserve’s last policy meeting will provide clarity on when it might start scaling back stimulus, which could hike the dollar and weigh on oil and other commodities.
The market is going to be looking for any comments from Fed officials and second-guessing what they might mean in terms of quantitative easing, Le Brun said.
“Since the timing and magnitude of the Fed’s tapering to its QE program is not yet known, market participants will be reading the FOMC minutes closely for implications regarding policy,” Jason Schenker, president and chief economist at Texas-based Prestige Economics, wrote in a note.
Investors are also looking for U.S. crude inventory and economic data to give direction to oil prices later this week.
Capping oil price gains, U.S. consumer sentiment ebbed in August and residential construction rose less than expected, potentially dimming chances of an acceleration in economic activity in the third quarter.
Some fears of supply disruption eased in the United States with BP Plc saying on Sunday it could start returning offshore workers to its deepwater Gulf of Mexico oil and gas facilities after a tropical storm had dissipated.
Source : Reuters
