Brent crude remains on track for its third weekly decline in five weeks amid UK oilfield restart
Brent crude held above $112 a barrel on Friday, but remained on track for its third weekly fall in five weeks, as supply concerns diminished with the imminent restart of Britain's largest oilfield.
December Brent crude edged up 2 cents to $112.44 a barrel by 9.10am UAE time, on course for a near 2-percent loss this week. US crude for December was down 1 cent at $92.09.
"We have enough supply. Short of any geopolitical or economic shocks, the market will probably grind lower this month," said Jeremy Friesen, a commodities strategist at Societe Generale in Hong Kong, adding that Brent would probably trade between $110 and $115 a barrel this quarter.
Nexen, operator of Britain's largest oilfield, North Sea Buzzard, said it would resume output on October 21, increasing supply of crude underpinning the Brent contract.
Maintenance at the field had tightened supply, strengthening prompt Brent prices and pushing the spread between the European marker and US crude to its widest in a year.
African crude supply will also rise in the next few months as South Sudan ordered oil companies to resume production on Thursday. The country expects its oil exports to return to the market in three months.
Oil prices got some support on Thursday, however, from a shutdown at TransCanada Corp's Keystone pipeline that moves Canadian crude from Alberta to the central United States.
"The Keystone pipeline is expected back on line by the 20th, so we're watching how this will turn out," said Ryoma Furumi, a commodities sales manager at Newedge Japan.
A rise in unconventional oil supplies in the United States and Canada is also weighing on the outlook for oil prices. Wall Street giant Goldman Sachs has called an end to the oil price super-cycle, reversing years of bullish recommendations, and cut its 2013 Brent forecast to $110 a barrel from $130.
But the risk of disruptions to crude supply from the Middle East remains and easing concerns about a growing slowdown in global growth support oil prices.
Data from the United States, the world's largest oil consumer, pointed to a slowly healing labour market and rising factory activity in the US mid-Atlantic region during October. China's economy is also likely to have stabilised after posting the slowest three months of growth since the depths of the financial crisis.
Implied oil demand in China hit a record high in September as refiners raised runs to meet peak seasonal consumption, but the pace of annual demand growth in the world's second biggest oil consumer is at its slowest in more than a decade.
"We've kind of ebbed into a bearish China view, but the market could change that view and that could be bullish for oil," Friesen said.
In the Middle East, European Union governments imposed sanctions this week against major Iranian state companies in the oil and gas industry, and tightened curbs on the central bank, cranking up financial pressure on Tehran.
But Iran is believed to be further increasing its uranium enrichment capacity, Western diplomats said, in another sign Tehran is defying international demands to rein in its disputed nuclear programme.