Oil Falls Below $108 Per Barrel


Oil fell below $108 per barrel on Wednesday, dropping for a fourth session, as concern eased about supply disruptions and on caution before a weekly supply report from top oil consumer the United States.

Crude has dropped this week on progress in resolving supply disruptions in Libya, signs of higher North Sea output and as Iran's new president signalled a willingness to negotiate with the West over its nuclear work.

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Brent crude fell 72 cents to $107.46 a barrel by 1339 GMT. U.S. oil slipped 47 cents to $104.83, also falling for a fourth consecutive session.

"Supply risks have clearly shifted to the background at the moment," said Carsten Fritsch, analyst at Commerzbank in Frankfurt. "Even the sharp drop in U.S. crude stocks failed to support the price."

Industry group the American Petroleum Institute on Tuesday reported crude stocks fell by 3.66 million barrels, more than expected. Investors will be looking to the U.S. government's supply report at 1430 GMT for confirmation of the move.

Oil slipped alongside falling equities on signs the U.S. Federal Reserve might trim its stimulus programme as soon as next month. That stimulus has broadly underpinned oil and other commodities.

Crude also came under pressure on Tuesday from an easing of the Middle East supply risk premium. New Iranian President Hassan Rouhani said he was ready to enter "serious and substantive" negotiations over Tehran's nuclear programme.

Western sanctions over the nuclear work have cut Iranian crude exports by about 1 million barrels per day since early 2012, according to industry estimates. The loss, and concern of a larger disruption to Middle East supply, have helped keep Brent above $100 for most of 2012 and this year.

"It is a fair bet that progress on the nuclear issue will be made with gestures on sanctions, small at first but probably growing larger," said David Hufton of oil brokers PVM in London. "It is the oil industry's version of tapering."

In the North Sea, supply of the four crudes underpinning Brent futures will rise in September, loading programmes showed on Wednesday. Planned maintenance finished on schedule on the Forties pipeline this week.