By Cassie Werber
Oil is down Tuesday morning amid plentiful supply and despite
the political tensions in Ukraine and the Middle East.
High supply levels will continue to preclude any marked
increases in price, said analysts at Commerzbank. "In Libya, for
instance, oil production is continuing to normalize gradually
despite ongoing fighting and growing political chaos," they wrote
in a note to clients.
Among the most alarming developments: Libya's outgoing cabinet
has acknowledged that it has lost control of the capital Tripoli to
Islamist-allied militias, risking oil production that averaged
around 500,000 barrels a day at the end of August.
Yet oil markets have barely reacted, although Commerzbank noted
that speculative financial investors increased their net long
positions in Brent by 1,000 contracts in the week to Aug. 26,
betting that the price would go up.
"This was the first position build for four weeks and only the
second in the last nine weeks. During this time, speculative net
long positions have plummeted by more than 70% to a two-year low,
which doubtless exacerbated Brent's price slide in July and
August," they wrote.
This morning, though, Brent crude oil for October delivery is
down 88 cents at $101.89 a barrel on ICE Futures Europe. October
WTI is down 70 cents at $95.27 a barrel on the New York Mercantile
Exchange.
U.S. markets will reopen after the Labor Day holiday weekend,
and investors are likely to assess recent developments in Ukraine
and Libya, and manufacturing and economic data from different
countries, traders said.
In Ukraine, the military is moving to adopt a defensive strategy
against an incursion by Russian troops, even as U.S. and European
officials discuss a fresh round of sanctions against Moscow.
Gasoil for September delivery is down $5.00 at $858.50 a metric
ton on ICE futures Europe. Gasoline for October is down 325 points
at $2.5909 a gallon.
-Eric Yep in Singapore contributed to this article.
Write to Cassie Werber at cassie.werber@wsj.com
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