Oil Slips Towards $102, Ample Supply Weighs

Oil slipped towards $102 a barrel on Monday, giving up an earlier gain, as ample supply and weak demand countered support from geopolitical tensions in Ukraine and Libya.

Libyan exports have risen and Iraq's exports have continued flowing despite fighting in both countries. Ample supply and weak demand have created an oversupply in the Atlantic Basin market, according to Morgan Stanley (MS).

Brent crude slipped 18 cents to $102.11 a barrel by 1353 GMT. It hit a 14-month low of $101.07 on Aug. 19. U.S. crude was down 47 cents at $93.18 a barrel.

"We expect Brent to trade in a slightly lower range for much of the third quarter, barring any geopolitical escalation," analysts at Morgan Stanley, led by Adam Longson, said in a note.

Underlining the extent of the recent selling pressure, exchange data on Monday showed hedge funds and other big speculators, in the week to Aug. 19, cut their bets on rising Brent prices to the lowest in more than two years.

Some analysts say further losses are unlikely given supply risks and geopolitical tensions.

"Oil prices are likely to stabilise, so we no longer expect prices to slide any further," said Carsten Fritsch, analyst at Commerzbank. "Risks to the oil supply are still considerable."

A further recovery in Libyan output, last reported to be 612,000 barrels per day (bpd), looks uncertain, analysts say. Rockets hit an airport in eastern Libya on Monday, a day after fire destroyed the terminal at Tripoli's main airport.

"Libyan supplies could trickle back, but maintenance and security issues should keep exports subdued," Morgan Stanley said.

In Europe, Russian President Vladimir Putin will meet his Ukrainian counterpart Petro Poroshenko for the first time in months on Tuesday to try to reach a compromise on Ukraine.

Russia wants to send a second humanitarian aid convoy to eastern Ukraine in the near future, Foreign Minister Sergei Lavrov said on Monday after Kiev and the West criticised Moscow for sending the first without official permission.

The dollar index rose as the U.S. Federal Reserve prepared to lay the groundwork for the central bank's first interest rate increase in nearly a decade.

A stronger dollar makes dollar-denominated commodities such as oil more expensive for holders of other currencies and tends to weigh on prices.

(By Alex Lawler, Additional reporting by Florence Tan; Editing by Dale Hudson and David Goodman)