Oil prices held steady at above $112 a barrel today, but analysts and traders said a move to the downside was likely because the UK's Buzzard oilfield was expected to restart this weekend while the demand outlook remained weak.
At 9.36am (Irish time) December Brent crude oil futures were up 32 cents a barrel but were on course for another weekly loss. U.S. crude was down 9 cents at $92.01 a barrel.
"We have enough supply. Short of any geopolitical or economic shocks, the market will probably grind lower this month," said Jeremy Friesen, a commodities strategist at Societe Generale in Hong Kong.
Nexen, operator of Buzzard, Britain's largest oilfield, said it would resume output on October 21st, increasing the supply of crude that underpins the Brent contract.
"The concern is that demand won't be strong enough to absorb the rapid increase in supply," said Carsten Fritsch, an energy analyst at Commerzbank in Frankfurt.
Maintenance at the Buzzard field tightened supply through late September and early October, strengthening prompt Brent prices and pushing the spread between the European marker and US crude to its widest in a year.
But Mr Fritsch described the market as rangebound, with no strong feeling as to where it will go next as numerous conflicting supply and demand factors offset each other.
"There's a lack of conviction in movements either way, so we have seen some flip-flopping this week with a $1 move up, then a $1 move down," he said.
Ole Hansen, senior commodity strategist at Saxo Bank, agreed. "The market is not able to find any particular drivers so there is not much incentive to push it in either direction," he said.
Brent closed 80 cents down yesterday after the dollar rose and Goldman Sachs revised its 2013 forecast for Brent down to $110 from $130 a barrel.
"They went neutral after being one of the big bulls - that helped drive the market lower. But the Brent-WTI spread is widening now, so it is basically a Brent move today," Mr Hansen said.
Reuters
