LONDON: Brent crude oil fell below $108 a barrel Monday on news of improving production from Libya and the North Sea and after eurozone data showed retail sales declined across the board for the first time in three months. Brent fell $1.40 per barrel to a low of $107.55 before recovering to trade around $107.95. U.S. light crude oil futures lost 90 cents to $106.04.
Libyan Oil Minister Abdel-Bari al-Arusi told a news conference Monday the country’s oil output had improved to around 700,000 barrels per day and the government was working to end protests at oil facilities.
Output is also improving in the North Sea, industry sources say, with news that the Buzzard Oilfield, Britain’s largest, was expected to begin restarting later Monday, on schedule, after a five-day maintenance shutdown.
Loss of production from key oil exporters has been an important support for prices over the last month with a series of unscheduled outages disrupting output.
Shipments from Iraq have also been hit by damage to pipelines and maintenance work is also expected to cut Iraqi output by between 400,000 and 500,000 bpd in September.
In another incident, tribesmen blew up Yemen’s main oil export pipeline late Saturday, halting the flow of crude.
Also denting the oil market were disappointing figures from the eurozone where retail sales declined across the board for the first time in three months, highlighting the fragile nature of Europe’s economic recovery and energy demand.
Investors were cautious after Iran and the United States signaled a will to improve relations and end a dispute over Tehran’s nuclear program, which has added a risk premium to financial markets and helped prop up oil prices.
Newly elected Iranian President Hasan Rouhani has called for dialogue to reduce “antagonism and aggression,” while the U.S. has said it is ready to work with Rouhani’s government if it were serious about engagement.
Iran’s oil exports have been cut by more than half due to Western sanctions. That has helped keep oil above $100 for most of 2012 and this year.
“Given the change of tone in Iran and comments from the United States, we are seeing risk premiums surrounding the Middle East and Iran coming off,” said Jonathan Barratt, chief executive of Barratt’s Bulletin.