UPDATE 9-Brent crude falls on demand concerns, fragile economies

Wed Nov 14, 2012 3:00am IST

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* Oil supply grows, demand limited - IEA
    * German analyst/investor sentiment falls in November
    * Threat-focused Iran starts air drills
    * Coming up: API oil data 4:30 p.m. EST Wednesday


    By Robert Gibbons and David Sheppard
    NEW YORK, Nov 13 (Reuters) - Brent crude oil fell for a
second day on Tuesday over concerns about lower demand in a
well-supplied market and as the United States and Europe
grappled with fragile economies.
    Oil prices came under pressure from an International Energy
Agency report that cut estimates for global oil demand in the
last three months of this year and for growth in 2013.
  
    The IEA also said Iran's production and exports had
rebounded in October, despite Western sanctions, adding to the
amount of crude oil in the market.
    "What we can see now is that the market is well supplied,"
IEA Executive Director Maria van der Hoeven told the annual "Oil
& Money" conference in London.
    At the same event, OPEC Secretary General Abdullah al-Badri
agreed: "There is no shortage anywhere in the world."
    Brent crude for December delivery closed down 81
cents to settle at $108.26 a barrel, having fallen to a low of
$107.38 during the session.
    U.S. December crude settled down 19 cents at $85.38 a
barrel, having slipped after rising to $85.95 earlier in the
session.
    While U.S. crude futures seesawed during the session,
Brent's steeper slide was attributed to news that Nexen Inc's
 Buzzard oil field in the North Sea came back on line
Monday after a power outage briefly halted production at the
weekend. 
    More pressure came from an unexpected fall in German analyst
and investor sentiment in November as the euro zone's debt
crisis drags on Europe's largest economy. 
    While the gloomy German sentiment reading helped push
European shares lower, equities on Wall Street turned higher
soon after the open as strong results from home-improvement
giant Home Depot overshadowed concerns about U.S. tax
increases and automatic spending cuts in January.  
    "The Buzzard resumption, weak German data and overall euro
zone worries pressuring the euro have helped put more pressure
on Brent," said John Kilduff, a partner at hedge fund Again
Capital LLC.
    Brent's premium to U.S. crude fell back below
$23 a barrel on Tuesday after reaching $23.78 during the session
but not threatening Monday's $24.02 intraday peak.
    The spread hit a 12-month peak of $24.33 on Oct. 29, then
contracted to $20.10 on Nov. 5 before widening again.
    Prices around the U.S. oil futures delivery hub of Cushing,
Oklahoma, have been under pressure from a planned overhaul of
the largest crude unit at the giant BP refinery in
Whiting, Indiana.
     The 337,000 barrel per day BP plant normally sources crude
supplies from Cushing. 
    U.S. RBOB gasoline and heating oil futures
also slipped. The U.S. Energy Department's decision to tap
100,000 barrels of strategic diesel reserves in the wake of
Superstorm Sandy, announced late on Friday, saw heating oil
prices fall for a second day, sliding by around 4 cents a gallon
to settle near $2.96 a gallon.
    Brent and U.S. crude, gasoline and heating oil futures all
sat below their 50-, 100- and 200-day moving averages, technical
levels monitored by chart watchers.
    Weekly U.S. oil stocks data from the American Petroleum
Institute (API) and the U.S. Energy Information Administration
(EIA) has been delayed by one day to Wednesday and Thursday
respectively after government offices were closed for the
Veterans Day holiday on Monday.
     
  
    Brent prices have stayed over $100 through most of this year
despite a weakening demand outlook, touching a high of $128 in
March on worries of a disruption in supply from the Middle East
as tension rose over Iran's disputed nuclear program.
    Iran unveiled new missile and artillery systems on Tuesday,
Iranian media reported, on the second day of large-scale
military exercises which officials said were aimed at sending a
warning to those threatening the Islamic Republic
 
    Tension also remained high on the Golan Heights, where
Israeli gunners have retaliated against stray Syrian mortar fire
landing on the occupied plateau in the previous two days.
    France became the first European power to recognize Syria's
new opposition coalition as the sole representative of its
people and said it would look into arming rebels against
President Bashar al-Assad once they form a government.
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