Brent hits two-week high near $ 112, South Sudan supply in focus

Tuesday, 24 December 2013 00:11 - - {{hitsCtrl.values.hits}}

REUTERS: crude hit a two-week high near $ 112 a barrel on Monday as internal strife in South Sudan threatened the country’s oil output, adding to supply woes in Africa. South Sudan’s Government said on Sunday rebels had seized the capital of a key oil-producing region. Fears grew of an all-out ethnic civil war in the world’s newest country that could cut off its 245,000 barrels per day (bpd) oil output. This could add to the more than 1 million bpd of lost supply from Libya where key oil ports were shut by a group demanding greater autonomy for the country’s eastern part.

February crude edged down 4 cents to $ 111.73 a barrel by 0727 GMT after gaining 2.7% last week. It touched a high of $ 111.93 earlier in the session. US crude for February delivery was at $ 99.01 a barrel, down 31 cents. “You’ve lost Libyan supply and you’ll lose Sudanese supply. Although they are not large amounts, they are significant enough to make people nervous,” said Jonathan Barratt, Chief Executive of commodity research firm Barratt’s Bulletin in Sydney. “The escalation of violence in Sudan will probably start to push out the -WTI spread again,” he said, adding that the spread may widen back to $ 16. The spread stood around $ 12.57 on Monday, after narrowing nearly $ 9 in two weeks at the start of the month. South Sudan’s Ambassador in Khartoum said on Sunday that oil was flowing normally although the country’s main investor China National Petroleum Company has evacuated its oil workers from the fields to the capital Juba. Libya’s Oil Minister said on Saturday force should be used to reopen key oil ports in the eastern part of the country which have been closed for five months. Worries about short supplies have caused the oil market’s pricing dynamics to shift, with prompt delivery oil rising above prices for future delivery, Saudi Arabia’s Oil Minister said on Saturday. The minister played down suggestions that the kingdom was ready to cut production. Oil also remained supported by expectations of robust fuel demand at the world’s largest oil consumer after the US economy grew at its fastest pace in almost two years in the third quarter.