Egypt, Japan discuss economic ties, preparations for TICAD conference    Real Estate Developers urge flexible land pricing, streamlined licensing, and dollar-based transactions    Madinet Masr in talks for three land plots in Riyadh as part of Saudi expansion    Egypt's PM tells Palestinian PM that Rafah crossing is working 24/7 for aid    Egypt's Sisi pledges full state support for telecoms, tech investment    EGP inches down vs. USD at Sunday's trading close    EGX launches 1st phone app    Escalation in Gaza, West Bank as Israeli strikes continue amid mounting international criticism    Egypt recovers collection of ancient artefacts from Netherlands    Egypt, UNDP discuss outcomes of joint projects, future environmental cooperation    Egypt harvests 315,000 cubic metres of rainwater in Sinai as part of flash flood protection measures    After Putin summit, Trump says peace deal is best way to end Ukraine war    Egypt, Namibia explore closer pharmaceutical cooperation    Jordan condemns Israeli PM remarks on 'Greater Israel'    Renowned Egyptian novelist Sonallah Ibrahim dies at 88    Egypt prepares to tackle seasonal air pollution in Nile Delta    Al-Sisi says any party thinking Egypt will neglect water rights is 'completely mistaken'    Egyptian, Ugandan Presidents open business forum to boost trade    Egypt's Sisi, Uganda's Museveni discuss boosting ties    Egypt's Sisi warns against unilateral Nile measures, reaffirms Egypt's water security stance    Egypt, Colombia discuss medical support for Palestinians injured in Gaza    Egypt, Huawei explore healthcare digital transformation cooperation    Egypt's Sisi, Sudan's Idris discuss strategic ties, stability    Egypt's govt. issues licensing controls for used cooking oil activities    Egypt to inaugurate Grand Egyptian Museum on 1 November    Egypt's Sisi: Egypt is gateway for aid to Gaza, not displacement    Greco-Roman rock-cut tombs unearthed in Egypt's Aswan    Egypt reveals heritage e-training portal    Sisi launches new support initiative for families of war, terrorism victims    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







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Oil gains on Libya fighting, manufacturing data
Published in Daily News Egypt on 23 - 08 - 2011

LONDON: Brent crude held steady on Tuesday, supported by better than expected manufacturing data in Germany and China and by uncertainty in Libya where government loyalists staged a fight back.
At 1103 GMT, Brent crude was up 18 cents to $108.54 a barrel. US October crude was up $1.12 to $85.54, supported by expectations that US oil stockpiles released later in the session may drop.
Forces still loyal to Libyan leader Muammar Qaddafi fought rebels in Tripoli on Tuesday, extending a conflict that looked close to conclusion on Monday after rebels swept into Tripoli in tandem with an uprising within the city.
The extent of the loyalists' strength surprised some in the market, after Brent fell on Monday on hopes for a quick resolution and a speedy restart in exports from the OPEC member.
Investors focused on the positive from the flash purchasing managers' indexes from Germany and China, which, although showing the factory sector was likely to slow, indicated the motors of the global economy in recent years were still growing robustly.
But Brent — a benchmark measuring oil prices from Atlantic fields — continued to under perform US crude, equities and other commodities like copper, with expectations the Libyan conflict will come to a conclusion relatively soon, limiting gains.
"There's light at the end of the tunnel in Libya and any signs that the conflict is ending will push Brent down as there will be more oil into the Atlantic basin," Helen Henton, analyst at Standard Chartered said.
Analysts were divided on the implications of the latest developments in Libya. Citigroup lowered its price forecast for US crude to $89.69 per barrel for 2011 and $71.75 for 2012, citing weak global demand.
Goldman Sachs by contrast said despite a likely increase in production from Libya at the top end of its forecast, it would be "only a matter of time" until OPEC spare capacity was exhausted, requiring higher oil prices to restrain demand.
Libya would be able to restart some oil output in a few months, the country's former top oil official said on Monday. But it would take as long as 18 months to reach the pre-war level, Shokri Ghanem said.
Before the conflict, the country pumped around 1.6 million barrels per day (bpd), nearly two percent of global output.
Most of Libya's high quality crude went to European refiners. The prospect of an increase in supply of light sweet crude into Europe has led to the spread between Brent and US crude narrowing.
However the latest news that Qaddafi loyalists appeared to be making progress highlighted the difficulties inherent in bringing Libya's oil capabilities back on tap.
"Come the time that rebels take power, the potential for Gaddafi loyalists to seek revenge and target oil installations is high, while threats to personnel may also emerge," JBC said in a note.
"The rebels may find that winning the war is one thing but securing the peace is something more elusive."
A son of Muammar Qaddafi — who rebels said they had captured — appeared with cheering supporters in Tripoli, giving a boost to forces loyal to the veteran leader. The whereabouts of his father remained a mystery.
Brent premium narrows
Brent's premium to US crude fell to around $23 a barrel after scaling a record high of $26.69 on Friday.
A fall in US crude stockpiles could lead to a further contraction in the spread. US crude inventories were forecast to have fallen due to lower imports, a preliminary Reuters poll showed on Monday ahead of weekly data.
Four of seven analysts polled expected crude stock piles to have dropped in the week to Aug. 19, with the average forecast showing a drawdown of 200,000 barrels.
The latest storm in the Atlantic hurricane season poses no threat to oil operations in the Gulf of Mexico, forecasters said. Irene strengthened into a Category 2 hurricane as it swept north of the Dominican Republic on Monday.
Investors will watch Fed Chairman Ben Bernanke, who will make a speech on Friday in Jackson Hole, Wyoming, at an annual gathering of policymakers and academics.
Recent market turmoil and signs of weaker US growth have boosted expectations Bernanke may raise the prospect of more emergency stimulus for the world's largest economy and top oil importer.
At last year's meeting, Bernanke hinted at what eventually became a $600 billion quantitative easing bond-buying program, known as QE2. But some economists said Bernanke may hold off on aggressive easing plans this year.


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