London: Brent crude oil rose towards $103 a barrel on Wednesday, recovering from a 14-month low hit last week as traders monitored maintenance work in the North Sea, although healthy global supplies limited gains.
Oil benchmarks on both sides of the Atlantic have fallen by more than 10 per cent since mid-June and remain on track to post a second monthly fall against a backdrop of lower imports by the United States and slowing growth in China and Europe.
But on Wednesday traders were watching to see if the Buzzard oilfield in the North Sea, one of the biggest contributors to physical supplies underpinning Brent futures contracts, would return quickly after shutting again for additional maintenance.
Industry sources said the field is due to resume exports on Thursday after output was stopped for work on a drilling rig. It had restarted Monday, after being shut for maintenance since July.
“Prices have fallen so much the market is vulnerable to any supply surprises, including the new Buzzard work,” said Andrey Kryuchenkov at VTB Capital in London.
“The market had been largely stripped of its risk premium and funds had largely exited the market, so we could see this rebound continue.” Brent crude for October delivery was up 20 cents at $102.70 a barrel by 1053 GMT, rebounding from a 14-month low of $101.07 a barrel last week. It slipped slightly from a day high of $103.07 after sources said Buzzard was on track to return on Thursday.
US crude rose 26 cents to $94.12 a barrel after settling 51 cents higher on Tuesday on stronger economic data in the United States. Its discount to Brent was at $8.58 a barrel, having widened to its largest in two months on Monday.
Traders are also watching for weekly oil inventory data from the US government later to see if it confirms a drop in crude stocks shown in industry data on Tuesday.
Crude inventories fell by 1.3 million barrels in the week ended August 22 to 361.5 million, data from industry group the American Petroleum Institute (API) showed on Tuesday, in line with analysts’ expectations.
Stocks at Cushing, Oklahoma, delivery point of the US crude oil contract, rose by 265,000 barrels, the API said.
Global oil supplies have been ample for much of the summer, despite violence in Opec members Iraq and Libya.
“We are seeing softer-than-expected demand and in the absence of any further disturbing developments in geopolitical areas, the pressure remains on the energy complex,” said Michael McCarthy, chief strategist at CMC Markets in Sydney.
Conflict with Islamic State militants in northern Iraq has not prevented oil exports from the south of the country from holding near-record levels, while Libya’s exports have risen despite month-long clashes between rival militias.
In Europe, Ukrainian President Petro Poroshenko promised after negotiations with Russia’s Vladimir Putin to work on a ceasefire plan to defuse the separatist conflict in the east of Ukraine.
Any significant moves towards a truce between Kiev and two rebel eastern regions could mean an eventual move towards ending sanctions on Russia that have pressured the economy of the world’s second-largest oil exporter.
Elsewhere, Saudi crude exports fell in June to their lowest levels in almost three years as oil use in the country’s power sector rose, official data showed, though industry sources say Opec’s largest producer raised output in July.
