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Oil dips slightly on Libya concerns

Published 08/05/2013, 09:02 PM
Updated 08/05/2013, 09:03 PM

Investing.com - Oil futures traded slightly lower in the early part of Tuesday’s Asian session as news of production concerns in Libya trumped some positive U.S. economic data.

On the New York Mercantile Exchange, light, sweet crude futures for September delivery fell 0.15% to USD106.40 per barrel in Asian trading Tuesday. The September contract inched down 0.07% to settle at USD106.86 a barrel during U.S. trading Monday.

In U.S. economic news out Monday, the Institute for Supply Management said its services index climbed to 56 in July from 52.2 in June. Economists expected a July reading of 53. The new orders index rose to 57.7 from 50.8, but the employment index fell to 53.2 from 54.7. Readings above 50 indicate expansion.

With the U.S. being the world’s largest oil consumer, accounting for 22% of global demand, the ISM should have been a bigger boost to oil bulls, but that was not the case.

Political volatility in Libya, a member of the Organization of Petroleum Exporting Countries, has some traders believing oil could rise in the near-term. Combine that with lingering violence in Egypt, home of the Suez Canal, a major transport zone for oil, and oil could be ripe for a spike.

However, any ebbing of tensions in the Middle East could prompt traders to take profits in oil and exit the trade. Libya is home to Africa’s largest oil reserves. Three terminals, which ship 1 million barrels per day, are still not operative in the North African nation.

West Texas Intermediate futures are up over 27% in just the past nine months, but traders are seen reducing net long exposure to crude.

Elsewhere, Brent futures for September delivery inched down 0.05% to USD108.58 per barrel on the ICE Futures Exchange.


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