Oil holds near $111, timing of rise in Iran exports unclear

by **Cals** Tue 26 Nov 2013, 18:16

Business & Markets 2013

Written by Reuters

Tuesday, 26 November 2013 18:16

(26/11/13 17:39:29)

* Iran taps tanker shipping network to tackle unsold oil glut
* U.S. crude stocks seen up, distillates down -poll
* API due to release data on U.S. oil inventories

LONDON/SINGAPORE (Nov 26): Oil held near $111 a barrel on Tuesday, as investors judged that the historic deal between Iran and world powers would bring no immediate increase in crude oil supplies from the OPEC member.

The deal halts Iran's most sensitive nuclear activity and suspends some sanctions by the West, but caps Iran's exports at the current level of about 1 million barrels per day (bpd).

That means supply concerns continue to affect the market, amid disruptions to oil exports from Libya.

Front-month Brent crude slipped 39 cents to $110.61 a barrel, by 0850 GMT. It had plunged as much as $3 in the previous session, but recouped most of those losses, to end 5 cents down. U.S. oil rose 44 cents to $94.53.

"Prices recovered very rapidly yesterday, but they are heading down again now," Christopher Bellew, trader at Jefferies Bache, said. "There will be slightly more Iranian crude in the market. Not much, but more. We'll probably see prices go back down to $109."

Iran is mobilising more ships to store and transport oil, aiming to keep its fields working and mitigate losses of several billion dollars a month, as sanctions remain in place for at least another six months.

U.S. stockpiles

Tetsu Emori, commodities fund manager at Astmax Investments, sees both benchmarks holding around current levels, with supply-side issues supporting prices. Investors will gauge the global demand outlook, once more clarity emerges on when the U.S. Federal Reserve will taper monetary stimulus.

"Prices are likely to stabilise now, as other fundamental factors out there start to weigh in," Emori said.

Oil, particularly the U.S. benchmark, was supported by expectations that distillate stocks, which include heating oil and diesel fuel, dropped by 800,000 barrels last week, indicating a pick-up in demand in the world's top oil consumer.

The expected fall is overshadowing a forecast of a rise in crude stocks, by 800,000 barrels for the week ended Nov. 22.

Industry group American Petroleum Institute (API) will release its numbers later in the day, followed by the official U.S. Energy Information Administration data, on Wednesday.

A drop in Libya's exports to a fraction of its capacity, is also supporting oil.