Oil holds near $97, supplies counter disruption fears
London (Sept 26) Brent crude held near $97 a barrel on Friday but headed for its biggest monthly drop since April 2013 as rising supplies outweighed fears that U.S.-led strikes against Islamist militants in Syria and Iraq would disrupt oil production.
Slowing economic activity in Europe and Asia has dampened demand for oil, while supply is on the rise.
Libya's output has reached 925,000 barrels per day (bpd), the highest since militias turned on each other after the overthrow of Muammar Gaddafi.
"At the moment, supplies are abundant and demand is weaker," said Andrey Kryuchenkov, an analyst at London-based VTB Capital.
Brent for November delivery was up 2 cents at $97.02 a barrel by 1027 GMT. U.S. crude rose 32 cents to $92.85 a barrel. Both contracts were heading for a third straight month of losses, with Brent also set to record its biggest monthly drop since April 2013 of more than 6 percent.
Air and missile strikes have hit oilfields in eastern Syria in an apparent attack by U.S.-led forces against Islamic State militants, a monitoring group said on Friday.
The military campaign gained momentum as French fighter jets joined those from the United States, while Britain was seeking to join the U.S.-led coalition.
But the global political risk premium for oil remained low as the coalition appeared united and was gaining ground against Islamic State, Kryuchenkov said.
Prices are likely to remain under pressure until European refineries return from maintenance in November and OPEC meets in Vienna on Nov. 27 to consider whether to adjust its output target of 30 million bpd for early 2015, Kryuchenkov said.
The dollar's recent rise against other currencies further weighs on demand for the greenback-priced commodity.
"There is a clear lack of any impetus to drive any price recovery ... The leading sentiment indicators that will be published in the middle of next week for the major economies look unlikely to remedy this," Commerzbank said in a note.
Top oil exporter Saudi Arabia is likely to keep its output steady throughout the rest of the year as world consumption is expected to rise.
Iranian oil minister Bijan Zanganeh called on members of the Organization of the Petroleum Exporting Countries (OPEC) to "make joint efforts" to keep oil prices from falling further.