SINGAPORE, May 26 (Reuters) – Brent crude edged down towards $110 a barrel on Monday, dipping further from last week’s two-and-a-half month high as worries over Ukraine eased slightly after its presidential election.
Resistance levels for Brent and West Texas Intermediate (WTI) on technical charts are also preventing prices from rising further. Market activity is expected to be limited as the U.S. and UK markets are closed for holidays.
July Brent crude LCOc1 was at $110.06 a barrel, down 48 cents, by 0255 GMT. U.S. crude futures for July delivery CLc1 edged down 29 cents to $104.06 a barrel, after settling on Friday at the highest since April 21.
Brent has risen briefly past a resistance level at $110.65 last week while WTI has traded near its resistance to $105, said Ric Spooner, chief analyst at CMC Markets in Sydney.
“There’s a bit of a caution here … markets are struggling to get past the chart resistance,” he said.
Money managers raised their net long U.S. crude futures and options positions in the week to May 20, the U.S. Commodity Futures Trading Commission (CFTC) said, ahead of peak summer demand. The Memorial Day holiday on Monday usually marks the start of the U.S. driving season. (Full Story)
“Although demand is going to pick up during the driving season, inventories are very high and supply capacities are very high so there shouldn’t be too much pressure on markets,” Spooner said.
Fighting in Ukraine and production cuts in Libya and South Sudan pushed Brent up to a 2-1/2-month high last week.
On Sunday, a decisive win for billionaire Petro Poroshenko in Ukraine’s presidential election raised hopes of political stability in Ukraine although a fraught mission to quell pro-Russian rebels and steer the fragile nation closer to the West await him. (Full Story)
“I don’t think the market really factored in any new risks in there,” CMC’s Spooner said.
Libya’s El Sharara and El Feel oilfields remain shut, a spokesman for state-run National Oil Corp (NOC) said on Sunday, almost two weeks after the government said protests at the western fields had ended. (Full Story)
Sabre-rattling between Iraq and Kurdistan over oil exports also heightened tensions in the region.
Iraq filed for arbitration against Turkey on Friday to stop exports of oil from Kurdistan after European markets bought the first load of oil piped from the autonomous region. Kurdistan said this was a “hollow threat” that will fail. (Full Story) (Full Story)