Brent Remains Lower On Oversupply Expectations
Brent crude oil fell to a new four month low after forecasts for increasing supplies were released on Tuesday. Brent crude oil traded at $105.95 at 5:32 GMT on Wednesday ahead of reports from the American Petroleum Institute and the Energy Information Administration.
Reuters reported that forecasts for the reports show US crude stockpiles increasing by about 1.8 million barrels. The rising stockpiles indicate that the market is oversupplied, even with supply disruptions in the Middle East.
Moving forward, investors will be focused on US data for clues about the number one oil consuming nation's appetite as its recovery gains momentum. Payrolls data and GDP data are expected to paint a clearer picture of the US' economic health when they come out at the end of this week. However, strong data would also make a case for the US Federal Reserve to pull back on its $85 billion per month bond buying plan, which would in turn could pressure crude prices.
Brent found some support from geopolitical tension in the Middle East where flare-ups in both Libya and Egypt renewed concern of a supply interruption. In Libya, reports of heavy shooting in Tripoli highlighted the Libyan government's lack of control over militia groups. The nation's oil supply has been cut to around 10 percent of capacity as protests and riots keep most of its largest oilfields shut.
Tension was also high in Egypt as former President Mohamed Mursi went on trial, where he could face a death sentence. The trial has reopened wounds for his supporters and sparked a fresh round of protests.
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