TOKYO (Reuters) - Brent crude futures held above $118 a barrel on Tuesday in thin trade due to Lunar New Year holidays in Asia, with the market showing little reaction to news of a North Korean nuclear test and awaiting weekly data on U.S. oil stocks.
North Korea conducted a nuclear test, South Korea’s defence ministry said, after seismic activity measuring 4.9 magnitude was registered by the U.S. Geological Survey.
“The test was not something that makes your heart pound as much as a pressing situation between Iran and Israel,” said Kaname Gokon, research manager at brokerage Okato Shoji, referring to the threat of possible military action to prevent Iran from developing nuclear weapons.
“Considering that there’s virtually no possibility of a nuclear attack by North Korea, the market remained calm.”
Iran says its uranium enrichment programme is for peaceful energy purposes only. Israeli Prime Minister Benjamin Netanyahu said on Monday that new centrifuges Iran was installing for its uranium enrichment programme could cut by a third the time needed to create a nuclear bomb.
London Brent crude for March delivery, which expires on Wednesday, was trading 9 cents higher at $118.22 a barrel by 0416 GMT, after settling down 77 cents on Monday.
U.S. crude for March delivery was down 12 cents at $96.91 a barrel.
China and Singapore are among the nations on holiday in Asia on Tuesday, with remaining investors in the region reluctant to take big positions.
Developments in the euro zone threaten to weigh further on equities and global oil demand, though recent data has shown stronger international trade in China, which helped Brent touch a nine-month high above $119 a barrel on Friday.
The oil market also looked ahead to the finance ministers from the Group of 20 nations scheduled to meet in Moscow on Friday and Saturday.
The Group of Seven nations are considering a statement this week reaffirming their commitment to “market-determined” exchange rates in response to heating rhetoric about a currency war, G20 officials said on Monday.
Oil markets were also focusing on weekly inventory data in top consumer the United States. U.S. commercial crude oil stockpiles are expected to have increased 2.9 million barrels last week, a preliminary Reuters poll of four analysts showed on Monday.
Distillate stocks, which include heating oil and diesel fuel, were projected to be down 800,000 barrels on average, while gasoline inventories were seen unchanged.
Industry group American Petroleum Institute releases its weekly report at 1630 EST (2130 GMT). The U.S. government’s Energy Information Administration is set to follow with its own figures on Wednesday. (Reporting by Osamu Tsukimori; Editing by Ed Davies)