Oil Steady at $98 on Oversupply Worries
Talk of OPEC cuts, lower Libyan output support prices; Dollar index highest in more than four years. Middle East tensions remain a big focus.
Brent crude oil steadied below $98 a barrel on Friday, not far above 26-month lows reached at the start of the week as OPEC talk of a production cut balanced worries about ample supply at a time of fragile demand.
Brent hit its lowest point since July 2012 on Monday as oil supply overwhelmed lacklustre demand in Europe and Asia, with a glut of high-quality, light oil pushing North Sea crude for immediate delivery to big discounts below futures.
OPEC's secretary-general responded to the price plunge, saying he expected the cartel, which pumps around a third of the world's oil, to reduce production next year.
Libya's oil production has also been hit by conflict, curbing a sharp increase in output in recent months.
Brent was unchanged at $97.70 a barrel by 1325 GMT, while U.S. crude was down 40 cents at $92.67. Both contracts saw their biggest drop in more than two weeks on Thursday.
"It's quite difficult to find any bullish factors. The Chinese and European economies are weak and are putting on pressure," said Tetsu Emori, commodity fund manager at Astmax.
PVM oil associates analyst Stephen Brennock said oil markets were focusing on oversupply and shrugged off a rally in European equities, which were bolstered by a rise in London's FTSE 100 following Scotland's decisive vote to remain part of the UK.
"Oil prices were not fazed by the Scottish referendum as global supply issues took precedence," Brennock said.
A stronger dollar has also dragged on oil markets as it makes commodities denominated in the U.S. currency more expensive for holders of other currencies.
The dollar strengthened against major currencies, with the dollar index hitting its highest in more than four years, underpinned by an improved U.S. job market.
Weak home prices in China added to fears of a slowdown in the world's second-largest economy.
This week the Organization for Economic Cooperation and Development slashed its growth forecasts for major developed economies to 0.8 percent this year from 1.2 percent.
But investors remained worried by geopolitical tension in the Middle East.
Jonathan Barratt, chief investment officer at Ayers Alliance, said an escalation in the conflict with Islamist militants who have seized large parts of Iraq and Syria could push up prices.
"All it takes is one suicide bomber in a European compound in Saudi Arabia, Bahrain or any of those countries and people will say 'game on'," he said. "That to me is the biggest risk at the moment."
By Christopher Johnson
