Oil slips towards $111, as supply outweighs Mideast

LONDON Tue Nov 20, 2012 3:40pm IST

Related Topics

LONDON (Reuters) - Oil slipped towards $111 a barrel on Tuesday as ample supplies outweighed worries over fighting between Israel and Palestinians in the Middle East.

Concern over the well-being of Europe's economy also pressured oil and other commodities after ratings agency Moody's stripped France of its prized triple-A badge due to an uncertain fiscal and economic outlook.

Brent crude was down 39 cents to $111.31 per barrel by 0925 GMT. U.S. crude fell 42 cents to $88.86.

"Oil had a good run up yesterday on events in the Middle East and it's pulling back a bit now in the light of bearish factors," said Christopher Bellew, a broker at Jefferies Bache. "The market is well supplied."

Investors are waiting to see if fighting subsides as world pressure intensified for a ceasefire in the Gaza strip. U.S. Secretary of State Hillary Clinton headed to the region with a message that escalation of the week-long conflict was in nobody's interest.

Some 110 Palestinians have died in a week of fighting, the majority of them civilians, including 27 children. Three Israelis died last week.

A peaceful outcome would see oil easing.

Jefferies Bache analysts estimate oil has a $2.50 to $3 per barrel premium due to the Israel-Gaza conflict.

"As far as the geopolitical issue is concerned, we feel that odds tilt in favour of some type of ceasefire or truce that could quickly force as much as $1-$.50 of security premium out of the market," they said in a research note.

U.S. DATA

Oil's downside was checked by promising data from the United States, the world's top oil consumer.

U.S. home resales rose in October and a gauge of homebuilder sentiment climbed to a six-year high in November, signs of surprising vigour in the country's still-struggling housing market.

Traders are now eyeing U.S. oil inventory data. A Reuters poll of analysts showed U.S. crude oil stockpiles were expected to have risen by 900,000 barrels in the week to November 16.(additional reporting by Jessica Jaganathan in Singapore; editing by Keiron Henderson)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Public Health

REUTERS SHOWCASE

Airtel Profit Jumps

Airtel Profit Jumps

Bharti Q2 net profit more than doubles   Full Article 

Maruti Earnings

Maruti Earnings

Maruti Suzuki net profit up 29 percent, beats estimates.  Full Article 

ICICI Results

ICICI Results

ICICI Bank Q2 profit up 15 percent, beats estimates.  Full Article 

Cost Cutting

Cost Cutting

PM Narendra Modi boots officials out of the first class cabin  Full Article 

Market at Record

Market at Record

Sensex, Nifty hit record highs; reforms outpace hawkish Fed.  Full Article 

Moody's on India

Moody's on India

Moody's welcomes India's policy steps, but wants to see more.  Full Article 

End Of QE

End Of QE

U.S. Fed ends bond buying, exhibits confidence in U.S. recovery.  Full Article 

Samsung Results

Samsung Results

Smartphone woes drag Samsung Elec Q3 profit to more than 3-year low.  Full Article 

Refining Margins

Refining Margins

BPCL aims to double refining margins with refinery expansion.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage