SINGAPORE — Brent futures held above $111 a barrel on Tuesday, on concern about a prolonged outage from Organisation of Petroleum Exporting Countries (Opec) member Libya, positioning the benchmark to end 2013 virtually unchanged.
Fear of supply disruptions in the Middle East and Africa have offset concern during the year about weak global demand, keeping Brent trading in a $22 range from $96.75 a barrel to $119.17 a barrel.
But the US benchmark looks set to end 8% higher for 2013, recouping a 7% loss the previous year and giving it gains in four of the past five years.
Brent crude rose 5c to $111.26 a barrel by 3.17am GMT, after settling 97c lower in the previous session. US oil gained 7c to $99.36 after ending $1.03 down.
"I think we will see similar sideways trading in oil next year. Markets will be volatile, but prices will stay in range," CMC Markets chief market analyst Ric Spooner said in Sydney.
"Key factors for the market next year will be on the supply side and global economic growth."
Mr Spooner expects Brent to trade between $90 and $120 a barrel next year, and the US benchmark to hold an $85-$115 range. The spread between the two contracts may widen as much as it did this year, but should average about $5 a barrel for the year, he said.
Growing unrest in key exporter Iraq, simmering tension between Iran and the West over Tehran’s disputed nuclear programme, and outages in Libya towards the later part of the year, all helped to keep oil supported.
That offset concern about a weak demand outlook in industrialised nations and a slowdown in consumption in China, the world’s second-biggest oil consumer.
Supply worries
The Hariga oil port, which officials had said was to open soon, remained shut on Monday, as the paralysis of Libya’s oil sector continued. Hariga has been shut since August.
Militias, tribesmen and civil servants have seized ports and oilfields to press for political or financial demands, drying up output to less than 250,000 barrels a day from 1.4-million barrels a day in July.
In Iran, a breakthrough deal last month with world powers over a decade-long dispute over the Islamic Republic’s nuclear programme has somewhat eased tension but its exports have fallen by more than half to 1-million barrels a day due to tough sanctions imposed by the West.
Violence in Iraq has spiked this year as militants linked to al-Qaeda target the government and anyone seen to be supporting it, raising fear of a return to the sectarian conflict of 2006-07 that killed tens of thousands, and keeping investors worried about a disruption in shipments from the country.
"Further progress on improving relations with Iran, removal of more sanctions, unrest in Iraq and Libya restoring production capabilities are some of top issues for the market," Mr Spooner said.
Investors will also be watching for further developments on the US tapering its monetary stimulus. While the tapering would suggest the world’s biggest economy is gaining steam, it would also reduce the availability of the dollar, weighing on commodities that are priced in the currency, such as oil.
