Oil prices tread higher before US energy report

Taxis and cars at a Exxon station in the Foggy Bottom neighbourhood of Washingon, DC on February 19, 2013

Global oil prices rose slightly on Friday, after sharp falls the previous day, as investors awaited the release of key US crude inventories data.

Brent North Sea crude for February added 46 cents to $108.25 a barrel in midday deals in London.

New York's main contract, West Texas Intermediate for delivery in February, added just one cent to $95.45 per barrel.

"Brent futures rebounded from yesterday’s losses and climbed higher on Friday above $108 per barrel, although expectations for an increase in crude oil supplies in Libya capped gains," said Sucden analyst Myrto Sokou.

"The fairly disappointing Chinese PMI data, including manufacturing and services, has recently dominated the markets, adding pressure to commodity prices amid renewed concerns about a possible slowdown in the Chinese economy."

China is the world's second biggest oil consuming nation after the United States.

Sokou added: "Today, the main focus will switch to the release of the weekly EIA oil inventories report that could give a better outlook about the US oil fundamentals."

The US government's Energy Information Administration (EIA) inventories report, which is usually released on Wednesday, has been postponed due to the New Year's Day holiday.

According to analysts polled by Dow Jones Newswires, the average forecast is that crude oil supplies fell 2.2 million barrels last week, a fifth consecutive dip after a 10 week run of rises.

Crude futures had plunged on Thursday, with WTI losing $2.98 and Brent tumbling $3.02, following news that a major Libyan field could come back on line later this week.

“Brent prices fell by over $3 per barrel yesterday as supply concerns in Libya ease and expectations that stockpiles will sharply increase," analyst Lucy Sidebotham at British-based energy consultancy Inenco.

"Prices have firmed back to $108 this morning rebounding slightly from yesterday’s losses.

"The Libyan government is preparing to reopen one of its larger oilfields the El Sharara over the next few days, as protesters agree to stop a strike that has cut the fields production for three months."

A spokesman for the Libyan National Oil Corporation told AFP on Thursday that the 330,000 barrel a day El Sharara field is expected to resume normal output within two or three days, once protesters who have blocked production pull out.

Oil production in Libya has plunged to about 250,000 barrels a day from nearly 1.5 million in the face of demands from armed protesters for more regional autonomy and greater say over the distribution of oil revenues.

The market was also supported Friday by concerns about Iraqi exports, as militants bombed a major oil pipeline in the northern region of the country on Thursday.

Blasts hit the pipeline, which runs to the Turkish port of Ceyhan, in Salaheddin province to the north of Baghdad, according to an official, who added that the fire was extinguished and repairs had begun.

Iraq is heavily dependent on oil exports, and the government is seeking to dramatically ramp up its sales in the coming years to fund the reconstruction of its battered infrastructure.

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