Brent crude declined as Libyan supplies recovered and Iran agreed to start curtailing its nuclear program on Jan. 20 under a deal that will ease some sanctions on OPEC’s fifth-biggest member.
Iran will allow more intrusive inspections under the accord reached with world powers in November, President Barack Obama said yesterday.
In return, Iran will benefit from partial sanctions relief, valued by the U.S. at about $7 billion over six months.
Libya has restored output to almost 600,000 barrels a day, according to state-run National Oil Corp. The North Sea’s Buzzard field resumed output after a halt, its operator said.
“The market, albeit incorrectly, may see this deal as more oil from Iran,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd. a consulting company in London. “It doesn’t mean we instantaneously get more oil.”
Brent for February settlement decreased as much as 68 cents, or 0.6 percent, to $106.57 a barrel on the London-based ICE Futures Europe exchange, and traded for $106.92 at 1:16 p.m. London time. The European benchmark crude was at a premium of $14.97 to West Texas Intermediate.
WTI for February delivery slid as much as 88 cents to $91.84 a barrel in electronic trading on the New York Mercantile Exchange. The grade lost 6.3 percent last week.
The volume of all futures traded was about 19 percent below the 100-day average.
The Iranian pact starts a six-to-12-month timetable to reach a final agreement. Iran has asserted its atomic work is for peaceful purposes, while the U.S. and its allies say the Islamic republic seeks to develop a nuclear-weapons capability.
The Persian Gulf nation was the fifth-largest producer in the Organization of Petroleum Exporting Countries in December, according to data compiled by Bloomberg.
“I think we will remain in this sideways limbo,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “Volumes are low, and the market is still largely range-bound. The Iranian accord is already priced in.”
Libya, holder of Africa’s biggest oil reserves, produced 592,065 barrels a day on Jan. 11, National Oil Corp. said on its website. The country’s output, curbed by political protests and the seizure of ports by rebel groups, has recovered following the restart of the Sharara field earlier this month.
South Sudan’s government and rebel representatives prepared to begin direct negotiations on a cease-fire agreement in the African oil-producing state.
The two sides will start talks on an accord that East African mediators presented to them last week, Hussein Mar Nyuot, a rebel spokesman, said by phone Monday from Addis Ababa, the Ethiopian capital, where the discussions are being held.
The rebels are prepared to sign an accord without their demand for the release of 11 politicians being met, he said.
South Sudan holds sub-Saharan Africa’s largest oil reserves after Nigeria and Angola, according to BP Plc (NYSE: BP) data.
It has been exporting all of its crude -- about 245,000 barrels a day -- through pipelines across Sudan. The fighting has cut output to about 200,000 barrels daily, according to the South Sudanese government. Oil exports provide more than 95 percent of the state’s revenue.
Buzzard in the North Sea resumed pumping after a Jan. 10 stoppage, Nexen Energy ULC, the field’s operator, said Monday in an emailed statement.
Buzzard produces as much as 200,000 barrels a day of crude that feeds into Forties blend, one of four grades used to price benchmark Dated Brent.
Hedge funds became less bullish on WTI for the first time in six weeks as fuel inventories expanded, according to Commodity Futures Trading Commission data.
Money managers cut net-long positions, or wagers on a price advance, by 8.6 percent in the week ended Jan. 7, according to the CFTC report. That’s the most since June. So-called short positions gained the most since April.
Speculators cut net bullish bets on Brent crude by the most in more than six months, data from ICE Futures Europe show.
Futures and options contracts betting on price gains outnumbered short positions by 100,096 lots in the week ended Jan. 7, the London-based exchange said Monday in its weekly Commitments of Traders report.
The reduction of 36,515 contracts, or 27 percent, from a 10-week high last week represents the biggest cut since June 25, the data show.