Oil prices ease on Iran accord hopes, Fed tapering talk * Fed minutes show taper may happen at one of next few meetings * Major powers resume talks on Iran nuclear programme * Low US distillate stocks, Libya unrest stem slide * China factory sector grows at milder pace in November * Coming up: US Markit flash manufacturing PMI; Brent oil futures slipped below $108 a barrel on Thursday as the market waited for further indications on whether a preliminary deal between world powers and Iran over Tehrans nuclear programme could be reached this week. Oil was also weighed down by heightened expectations that the U.S. Federal Reserve will scale back its economic stimulus, and upcoming U.S. data will be eyed closely for further clues. Coming towards the end of the year, there are two taperings that people are watching - the tapering of Fed bond purchases and Iranian sanctions, Olivier Jakob at Petromatrix consultancy in Switzerland said. Both would depress prices. Brent crude fell 11 cents to $107.95 a barrel by 0940 GMT, after gaining the most in a week and ending up $1.14 on Wednesday. U.S. oil was near flat at $93.85 a barrel, after settling 4 cents lower. Minutes of the Feds Oct. 29-30 policy meeting showed officials felt they could decide to start scaling back stimulus at one of their next few meetings, which would boost the dollar and weigh on commodities such as oil. I think the main focus of the market is what U.S. monetary policy is going forward, said Michael Hewson, market analyst at CMC Markets in London. Talk of Fed tapering boosted the dollar to a four-month high versus the yen, a factor that weighed further on oil prices, Hewson said. Major powers resumed talks on Wednesday with Iran over its nuclear programme. While the United States warned it would be very hard to clinch a breakthrough deal, policymakers have said an interim accord on confidence-building steps could finally be within reach. Irans deputy foreign minister said on Thursday that the country would not stop its enrichment programme but the French foreign ministry was hopeful of striking an accord this week. Investors will watch to see whether the Iranian foreign minister flies into Geneva for the talks. If we hear that, then its a sign something will be signed, Jakob at Petromatrix said. An agreement may help defuse a decade-old standoff and dispel the spectre of a wider Middle East war over the Islamic Republics nuclear ambitions, which has kept oil near $100 a barrel despite a weak consumption outlook. LIBYA, U.S. STOCKS Oil also came under pressure as the latest data showed activity in Chinas vast factory sector grew at a milder pace in November as new export orders shrank. But the Flash Markit/HSBC Purchasing Managers Index (PMI) remained above 50, a level that demarcates expansion from contraction, for the fourth consecutive month. Unrest in Libya has helped stem a further price slide by stoking supply concerns. Political activists and disgruntled workers have been blocking most of the countrys oil facilities since the end of July. Libya was able to negotiate an end to protests that had blocked the Mellitah terminal until this past weekend. Adding further support, Energy Information Administration data showed U.S. stocks of distillates fell 4.8 million barrels last week, a draw that exceeded expectations by more than 4 million barrels.
Posted on: Thu, 21 Nov 2013 10:55:32 +0000
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