Brent slips as ECB disappoints, supply worries support

Thu Aug 2, 2012 5:24pm EDT
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By Robert Gibbons

NEW YORK (Reuters) - Brent crude futures slipped on Thursday as disappointment that the European Central Bank did not offer more immediate steps to boost economic growth weighed on oil prices, even as tightening North Sea supply and geopolitical concerns limited losses.

Reports showing jobless claims rose last week in the United States and an unexpected drop in U.S. factory orders in June, helped push U.S. crude futures down 2 percent a day after the U.S. Federal Reserve also dashed hopes for more stimulus to aid a sputtering economy.

"Draghi has disappointed, after the Fed, and the market had gone up on hopes for more action and the inflation that might be attached to stimulus," said Rick Scott, chief investment officer at L&S Advisors Inc in Los Angeles.

Trading was volatile and Brent futures received support from recent North Sea production problems and the potential threat to Middle East oil supplies from the turmoil in Syria and Iran's dispute with the West over Tehran's nuclear program.

Brent September crude dipped 6 cents to settle at $105.90 a barrel, having swung from $104.97 to $107.30.

U.S. September crude fell $1.78 to settle at $87.13 a barrel, having traded from $86.92 to $89.63.

"The North Sea problems and the proximity of the geopolitical threats are supporting Brent, even with the disappointment after the Fed and ECB decisions," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.

The European Central Bank (ECB) left its benchmark interest rate unchanged on Thursday and ECB President Mario Draghi largely repeated previous bank policy at his monthly news conference, leaving open the possibility of future action.   Continued...

An employee holds a gas pump at a gas station of Hyundai Oilbank in Seoul June 15, 2012. REUTERS/Choi Dae-woong