SINGAPORE — Brent crude hovered above $110 a barrel on Friday, underpinned by supply disruptions in Africa, while US oil is set for a sixth weekly rise buoyed by lower supplies at the contract’s delivery point and strong heating demand in North America.
Gains in West Texas Intermediate (WTI) crude shrank its gap with Brent to the narrowest in four months as supplies at WTI’s delivery point in Cushing, Oklahoma, fell after a new pipeline diverted crude to the Gulf Coast.
April Brent crude had inched up 1c to $110.31 a barrel by 2.54am GMT, while US crude futures for April delivery dropped 1c to $102.74.
Brent’s premium to US crude narrowed to as little as $7.09 in the previous session, its tightest since October 9.
"There is more upside for WTI than Brent because of the ongoing bullish news," Phillips Futures analyst Tan Chee Tat said in Singapore, pointing to extreme winter conditions in the US that are boosting heating oil demand.
A weaker US dollar, which fell to a seven-week low against the euro earlier this week, has also boosted demand for dollar-denominated commodities as they become more affordable to holders of other currencies.
Energy Information Administration (EIA) data released on Thursday was mixed for oil as Cushing crude stocks fell 1.73-million barrels in the week to February 14, while the country’s overall crude inventories rose by almost 1-million barrels.
Distillate stocks fell just 340,000 barrels, the data showed, far less than the 2-million barrel draw expected by analysts.
Domestic conflicts in Libya and South Sudan, and escalating protests in Venezuela are supporting Brent prices.
South Sudan had cut again its oil production to about 170,000 barrels a day even before the rebel strike on Malakal, which lay on the edge of Upper Nile state’s oil fields, a petroleum ministry official said. The government halted 45,000 barrel a day of output in neighbouring Unity earlier in the conflict.
Maintenance at Angola’s Plutonio oilfield in March will also cut supply by about 180,000 barrels a day.
"Renewed risks would definitely support Brent comfortably at $105-$110 a barrel, but it would not go beyond that," said Mr Tan.
