* Euro zone’s business slump deepens at quicker pace
* Global oil inventories rising, helps offset supply fears
* Coming Up: API oil inventory data; 2030 GMT
By Luke Pachymuthu
SINGAPORE, April 24 (Reuters) – Brent crude was steady under
$119 a barrel on Tuesday as fears over the health of the euro
zone economies and political uncertainty countered worries over
a production stoppage in the North Sea and potential supply
disruptions from Iran.
The euro zone economy remains in dire straits, with Monday’s
data showing the region’s business slump deepened at a quicker
pace than expected in April – indicating the region will stay in
a recession through the second half of the year.
Brent crude eased 9 cents to $118.62 a barrel by
0356 GMT, while U.S. crude was down 18 cents at $102.93.
“The whole macro picture at the moment just doesn’t look
good for crude. It’s looking pretty bearish,” said Jim
Ritterbusch, president of oil trading consultant Ritterbusch &
Associates in Galena, Illinois.
“So far all they (euro zone economies) have been doing is
throwing band-aids on their problems. I still see significant
risk from the southern European economies – Spain, Portugal
Italy to some extent. This is nowhere near over.”
Political turmoil in the Netherlands, where Prime Minister
Mark Rutte tendered his government’s resignation in a crisis
over budget cuts, added to the sense of concern about Europe,
while the prospect of a Socialist president in France triggered
worries that Paris might loosen its austerity commitment.
“The main dangers to the situation in Europe have been on
display over the past couple of days, and these include
political support for populist anti-reform economic agendas and
inadequate economic growth against a background of fiscal
austerity,” said Ric Spooner, chief market analyst at the
Sydney-based brokerage CMC Markets.
“The French election campaign, weak manufacturing PMI’s and
Spanish 10-year bonds yields at around 6 percent are all
indicators that make it hard for investors to increase risk
appetite.”
Oil prices were, however, supported by supply concerns
stemming from a production stoppage at the North Sea Buzzard oil
field, Britain’s largest, and worries over exports from Iran
amid Western sanctions. But analysts caution that rising global
inventories are likely to cap oil price gains.
“Even with this (North Sea disruption) and Iran’s barrels
coming off the market, there is more than enough oil to meet
demand at the moment,” Ritterbusch said.
“Saudi is committed to plugging the gaps left by loss of
Iranian supplies, and OPEC as a group is pumping well over its
targets.”
OPEC exports by sea, excluding Angola and Ecuador, will rise
by 620,000 barrels per day (bpd) in the four weeks to May 5 to
24.49 million bpd, UK consultancy Oil Movements said in a report
last week.
In the world’s top oil consumer, the United States, crude
stockpiles were expected to have risen last week, a Reuters
survey of analysts showed.
IRAN SANCTIONS
Loss of supply from Iran has come as a result of tougher
sanctions by the United States and its European allies who claim
that the Islamic Republic is producing nuclear weapons. Tehran
has long denied the allegations by the West, insisting that
their programme is for civilian purposes.
Iran will meet with officials from countries, including the
United States, Russia, China and Germany, in Baghdad in May in a
bid to resolve the standoff with the West over its nuclear
programme.
As a result of sanctions, South Korea’s crude imports from
Iran fell 40 percent in March from the same period a year
earlier. China also halved its imports last month from a year
ago due to disputes over contract terms.
Investors are now eyeing the U.S. Federal Reserve’s two-day
policy meeting that begins later in the day to gauge the central
bank’s attitude towards further monetary stimulus.
