Brent crude steadied around $111 today, as a weaker dollar offset concerns of supply disruptions as oil refiners and terminals along the US east coast weathered the worst of a tropical storm.
Brent crude was down 9 cents at $111.27 a barrel as of 7.55am, after slipping as low as $110.53. US crude gained 41 cents to $85.78, swinging between a high of $85.82 and a low of $85.11.
While the east coast has no major crude oil and natural gas production facilities like the more hurricane-prone Gulf Coast, it has a massive oil delivery hub at New York Harbour.
"Expectations of refiners being affected added a risk premium, but now that the impact is not as bad as expected, we are seeing a little pull back in prices," said Ben Le Brun, market analyst with CMC Markets in Sydney.
The Tropical Storm warnings for the US east coast have been discontinued, the US National Hurricane Center said.
Seven refineries with a total of 1.23 million barrels per day capacity - 73 per cent of the 1.7 million bpd total in the US Northeast - were in the storm's projected path.
Nuclear plants along the east coast were also unaffected, with most expected to restart or boost output once the storm passes. The storm has left at least 15 dead, as many as 3.6 million customers without electricity and thousands of downed trees.
Brent and US crude grades moved in opposite directions as traders punted on their price differential to widen further on differing fundamental outlooks, analysts said.
The Brent-WTI spread for October was at $25.45 a barrel, up 25 cents. It hit a record near $27 earlier this month.
"It's possible the spread could rise to $26-$28 in the short term. But the improvement of the situation in Libya is a bearish factor (for Brent), although it will take time for exports to return," said Ken Hasegawa, a commodity derivatives manager at Newedge Brokerage in Tokyo.
Libya's battered oil towns are struggling to get back to work after months of back-and-forth clashes between rebels and forces loyal to Muammar Gadafy along the Mediterranean coast.
Rebel authorities have called on oil workers to return to their jobs to get the country's economic lifeline flowing again.
"A resumption of output in Libya is a possibility and will weigh on the market from the supply side," said MF Global analyst Tom Pawlicki in a report.
US crude, which is more sensitive to news from the world's biggest economy, benefited from US Federal Reserve chairman Ben Bernanke's comments that suggested leaving the door open for further action to stimulate the world's biggest economy. His remarks and the downgrade of Irene also helped Asian stocks open firmer today.
The US central bank's policy panel will meet for two days next month instead of one to mull its options to provide additional monetary stimulus, among other topics, Mr Bernanke said on Friday.
But the chairman stopped short of announcing any new stimulus measures. The potential of stimulus measures weighed on the dollar.
Market participants will be watching a slew of economic data out of the US this week for further insight into the health of the world's biggest economy. The key will be the non-farms payrolls report for August due out on Friday.
Reuters
