Oil dropped on Friday with the per-barrel price of Brent contracts sliding below the $111 mark on signs of resumption of Libyan shipments and increased processing of US crude, but losses were minimized by economic data showing a strong demand forecast.
Brent crude dropped 36 cents to exchange at $110.64 per barrel, declining more than 2% this week.
US oil cut 29 cents to $103.77 per barrel, staying on course to close the week down 1.9% after declining for seven days in a row. The Fourth of July holiday in the US saw reduced volumes in trading.
“We have been in a corrective phase for oil prices over the past three sessions as the market comes to acknowledge that we have no disruption in southern Iraqi oil production or exports,”Harry Tchilinguirian of London-based BNP Paribas told Reuters.
Markets were witnessing a comparatively weakness in Brent versus WTI since Thursday because of the news that the Libyan government was likely to gain control of oil terminals, Tchilinguirian added.
The WTI versus Brent spread has contracted by about $1 to $6.94 per barrel in the past one week.
The Seaway pipeline is about to be completed in the United States, signifying an additional injection of 450,000 barrels per day of shale oil will in the near future reach the country’s Gulf Coast refiners, substantially cutting demand for foreign oil shipments, a bearing implication for the market.
The resumption of production in Es Sider and RasLanuf terminalsin Eastern Libya will see about 500,000 barrels per day of oil enter export markets after the halt of a stalemate with local elders that had significantly reduced supplies from the OPEC member.
Hans van Cleef of Amsterdam-based ABN Amro Bank NV told Bloomberg that oil shipments from Iraq to international markets was likely going to remain unaffected.
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