NEW YORK: Brent oil eased after hitting a five-week high yesterday pressured by increased supplies from Libya and the North Sea and as investors awaited direction from the new head of the US Federal Reserve on the course of the central bank’s monetary policy.
Fed chief Janet Yellen delivers her first testimony to Congress this week and markets expect her to indicate she will stay the course with tapering the Fed’s bond buying programme.
The Fed has been cutting its bond purchases by $10bn a month as the US economy has improved. The bond buying has largely supported commodity and equity markets.
“The overall sentiment is ‘steady as she goes’, said Tariq Zahir, managing member of commodity trading adviser Tyche Capital Advisors in New York. “I don’t think there’s going to be a taper of the taper.”
Labour Department data on Friday showed a drop in the overall unemployment rate to a five-year low even as the number of jobs added were less than expected. Market analysts said the impact of exceptionally cold weather across the nation may have skewed the data.
The intense and relentless cold also propped up oil prices as demand for heating fuels skyrocketed and refiners pumped out distillates.
Temperatures in large cities were expected to moderate after this week, also weighing on prices. US heating oil futures slipped 1.5 percent to $3.0044 per gallon.
March Brent crude was down 46 cents at $109.11 a barrel, after reaching a session high of $109.75, its loftiest since January 2.
The March contract expires at the end of trading on Thursday. Brent oil for April delivery was trading 50 cents lower at $108.35.
US crude was up 21 cents at $100.09, after rising to $100.46, a 2014 high.
The spread between the two benchmarks widened earlier in the session to $10 for the first time in a week then narrowed to $9 per barrel .
Output at Britain’s Buzzard oilfield had returned to a normal rate of 200,000 barrels per day (bpd) or more, following its fourth outage of 2014 last week.
Buzzard, Britain’s largest oilfield, will undergo a total nine weeks of maintenance in 2014, far more than the two weeks traders had expected. Libya’s current oil production is around 600,000 bpd with the El Sharara oilfield producing 327,000 bpd and national exports now at 450,000 bpd. Saudi Arabia produced 9.767 million bpd of crude oil in January, down from 9.819 million bpd in December.
