LONDON: Brent crude oil reversed early losses to trade back above $106 a barrel Friday, rebounding off a two-month low as traders assessed the likelihood of a sustained recovery in supply from Libya.
Brent remains on course to finish the week almost 1 percent lower, however, and has seen its premium over U.S. crude drop to its lowest in almost a month, as the startup of a major pipeline next week is expected to let more fast-rising shale production flow from U.S. Midwest to Gulf Coast refineries.
Brent crude for March delivery, which became the front-month contract following the expiry of the February contract Thursday, rose 28 cents to $106.03 a barrel by 1159 GMT, bouncing off a two-month low of $105.44. Front-month Brent is on course for a weekly decline of around 1 percent.
U.S. crude rose 51 cents to $94.47 a barrel and was set to post its first weekly gain in three weeks.
Libya’s crude production has partially recovered after it restarted output at the Al-Sharara field, while progress in nuclear talks between the major powers and Iran could ease sanctions that have curbed exports from the OPEC producer.
But losses have been limited as tensions continue to threaten the oil sector in Libya, where authorities held talks this week with protesters who threatened to restart a blockade of the Al-Sharara field.