BusinessOil Climbs To $61 On Mideast Supply Concerns

Oil Climbs To $61 On Mideast Supply Concerns

Brent crude oil rose to around $61 a barrel on Friday as fighting in Libya and Iraq stoked output worries, while traders kept a close eye on Iran nuclear talks that could eventually bring more supply to world markets.

Fighting has escalated in northeast Iraq where Islamic State militants have set fire to oilfields to deter Shi’ite militiamen and Iraqi soldiers from advancing. In Libya, worsening security conditions have led to the closure of 11 oilfields.

Brent LCOc1 was up 50 cents a barrel at $60.98 by 6.40 a.m. ET. U.S. light crude CLc1 was up 10 cents at $50.86 a barrel.

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Worries about oil supplies from the Middle East helped widen the premium for Brent over U.S. crude by nearly $1 to around $10 on Thursday.

“The Libyan and Iraqi oilfield skirmishes are worrying,” said Tamas Varga, oil analyst at London brokerage PVM Oil Associates. “There are serious supply issues there.”

Investors are watching nuclear talks with Iran and await data later on Friday on U.S. non-farm payrolls and rig counts.

Western diplomats say there are some signs of progress in discussions with Tehran over its nascent nuclear industry. Any sign of a deal between Iran and world powers could result in a flood of Iranian crude returning to the market.

Iran’s foreign minister has suggested a 10-year moratorium on some aspects of the nuclear program might be acceptable, although he declined to discuss the issue in detail.

The dollar was also a major factor as oil is priced in the U.S. currency on international markets and a stronger dollar makes fuel more expensive to holders of other currencies.

Positive payrolls data later on Friday could strengthen the dollar if it supports the case for a rise in U.S. interest rates.

Baker Hughes will release on Friday a weekly survey of the number of U.S. rigs drilling for oil, an indicator used by some investors to gauge if shale producers are cutting output after prices slumped.

“Given the higher production cost for shale oil, we view that the supply-demand matrix will adjust itself accordingly to eventually lift oil prices to at least the estimated production cost,” analysts at OCBC said in a note.

REUTERS

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