Oil slips on Fed taper worry and Iran deal hope by Manash Goswami, November 21 2013, 07:47 SINGAPORE — Brent futures slipped below $108 a barrel on Thursday on expectations the US Federal Reserve would scale back its massive economic stimulus and that world powers would strike a preliminary deal with Iran over its nuclear programme. Minutes of the Fed’s October 29-30 policy meeting showed officials felt they could decide to start scaling back the stimulus at one of its next few meetings, which would boost the dollar and weigh on commodities such as oil. But worries over supply from Libya helped stem the slide. Brent crude had fallen 25c to $107.81 a barrel by 3.45am GMT, after gaining the most in a week and ending up $1.14. US oil extended losses by 23c to $93.62, after settling 4c lower. The issue of tapering is back to the fore after yesterday’s Fed minutes, IHS Energy Insight vice-president of energy Victor Shum said Talks between Iran and world powers are erasing some geopolitical risks, but the situation in Libya is putting a floor on prices. The combination of factors should keep oil in a tight trading range until clear details are available on when the Fed will roll back its stimulus or geopolitical tensions in the Middle East worsen, Mr Shum said. He expects Brent to average at around $108 a barrel for the rest of the year, and the US benchmark to stay around $94 a barrel in the short term. Major powers resumed talks on Wednesday with Iran over its nuclear programme. While the US warned it would be very hard to clinch a breakthrough deal, policy makers have said an interim accord on confidence-building steps could finally be within reach. That may help defuse a decade-old standoff and dispel the spectre of a wider Middle East war over the Islamic republic’s nuclear ambitions, which has kept oil near $100 a barrel despite a weak consumption outlook. Outlook Oil was also under pressure as the latest data showed activity in China’s 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 the 50 line that demarcates expansion from contraction for the fourth consecutive month, helping assure investors the government has achieved the stability it sought to push through reforms. Elsewhere, oil was drawing support from Energy Information Administration (EIA) data that showed US stocks of distillates fell 4.8-million barrels last week, a draw that exceeded expectations by more than 4-million barrels. Brent could revisit its Wednesday low of $106.51 a barrel, as indicated by its wave pattern, while US oil’s sideways move indicated the formation of a falling wedge, Reuters technical analyst Wang Tao said. -Reuters
Posted on: Thu, 21 Nov 2013 08:15:51 +0000
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