BR:Brent eases towards $109 on demand worries; supply fears support
SINGAPORE: Brent futures slipped towards $109 on Thursday on worries an easing of the severe chill in the United States will lower demand for heating fuels and remove a key support for oil, though supply-disruption concerns kept the losses in check.
US crude oil was also under pressure as investors looked to book profits from its overnight gain.
A surge in the dollar and concerns over the consumption outlook of the world's second-biggest oil consumer China may also have weighed on oil prices.
Crude also tracked most risk assets such as Asian shares and base metals lower.
Brent crude dropped 19 cents to $109.33 a barrel by 0526 GMT, after settling almost unchanged overnight.
US oil fell 26 cents to $102.33, after ending 76 cents up.
"As weather conditions improve going forward, we may see a decline in demand for heating oil and that will put some pressure on oil," said Chee Tat Tan, an investment analyst at Phillip Futures in Singapore.
"Overall, we see Brent being supported by continued geopolitical tensions in Libya, South Sudan and others."
Brent faces strong support at $105.20 and resistance at $113 a barrel till the end of next week, Phillip Futures' Tan said.
He expects the US benchmark trading between $98 and $103.80, with the price difference between the two contracts holding between $7-$10 a barrel.
The US dollar held near two-week highs against a basket of major currencies, while Asian shares struggled to find a solid footing as escalating tensions sent investors scurrying from risk assets.
A strong dollar weighs on commodities such as oil, which are priced in the currency.
Investors are watching the unfolding crisis in Ukraine.
Russian President Vladimir Putin ordered drills by his armed forces to test combat readiness in western Russia, near the border with Ukraine, prompting Washington to warn a military intervention would be a grave mistake.
Oil markets are also watching the prolonged crisis in Libya, where oil output has slumped as the government struggles to control militias and improve law and order in the country.
