Brent Rises on Libyan Supply Doubts
Brent crude reversed early losses and rose towards $109 a barrel on Tuesday, as traders expressed doubt about how quickly supplies will return from Libya, while the threat of further Western sanctions against Russia provided additional support.
Libya said on Monday its western oilfields were ready to reopen, having been blocked by protests since March, potentially raising crude output from the North African country by 500,000 barrels per day (bpd).
On Tuesday output from Libya was still just 235,000 bpd, however, a spokesman for the National Oil Corporation (NOC) said, and the timing of any restart at three major fields in the west remained unclear.
Brent crude for June delivery was up 20 cents at $108.83 a barrel by 1239 GMT, after closing up 52 cents in the previous session. Prices had slipped in early trade to a low of $108.05, but reversed after the NOC statement.
U.S. crude rose 64 cents to $101.23 a barrel, after climbing 60 cents to $100.59 a barrel in the previous session. Its discount to Brent narrowed to $7.38 a barrel.
"The reaction to the announcement in Libya has been fairly limited given the risk surrounding the issues in Ukraine," said Carsten Fritsch, a commodities analyst at Commerzbank in Frankfurt.
Pro-Moscow rebel leaders called for the eastern Ukrainian region of Donetsk to become part of Russia, while Moscow appeared to use the results of a disputed referendum to put pressure on Kiev to hold talks with rebels in two breakaway regions.
The European Union imposed sanctions on a top aide to Russian President Vladimir Putin and the commander of Russian paratroopers as well as on two confiscated Crimean energy companies, raising pressure on Moscow.
Saudi Arabia's oil minister has pledged that the world's biggest oil exporter would boost supplies if any disruption is caused by the crisis in Ukraine.
The head of the International Energy Agency, the west's energy watchdog, said it had no plans to release emergency crude oil stocks due to the tensions with Russia.
"We only release stocks when there is a serious disruption the market cannot solve," IEA head Maria van der Hoeven said on the sidelines of a conference in Seoul.
In a monthly report on Tuesday, the Organization of the Petroleum Exporting Countries (OPEC) raised the forecast demand for its crude oil in 2014 to 29.76 million barrels per day (bpd), up 110,000 bpd from the previous estimate, but said its current output was meeting global consumption.
Summer Driving
U.S. oil futures were also being supported by speculation of a draw in crude inventories last week as the United States nears the start of its summer driving season, which prompts higher demand for fuel, ANZ analysts said in a note.
The consensus estimate of four analysts in a Reuters poll on Monday, however, showed commercial crude oil stocks would remain unchanged at 397.6 million barrels in the week to May 9.
The survey was taken ahead of weekly inventory reports from industry group, the American Petroleum Institute (API) and the U.S. Department of Energy's Energy Information Administration (EIA).
Growth in China's industrial production and retail sales for April came in below forecasts on Tuesday, further confirming a slowdown in growth in the world's second-largest oil consumer as the government drives reform of the economy.
Industrial production climbed 8.7 percent against a forecast 8.9 percent, while retail sales rose 11.9 percent, compared with an estimate of 12.2 percent. Both growth figures were the weakest in at least five years.
China's implied oil demand in April climbed 1.1 percent to 9.71 million bpd from a year earlier, according to a Reuters calculation based on preliminary data.
(By David Sheppard,Additional reporting by Charles Staples in London, Keith Wallis in Singapore and Jane Chung in Seoul; editing by Jason Neely and Keiron Henderson)
